Ongoing Acquisition Attempts for German Company Valued at $1.3 Billion
BENGALURU: Persistent Systems has initiated an all-cash bid to acquire Germany’s Nagarro for approximately $1.3 billion. This acquisition could establish a digital engineering and AI powerhouse valued at $2.9 billion, employing over 46,000 people. Persistent has proposed a price of €81 per share for Nagarro, which reflects a 140% premium over the stock’s closing price on June 25.
Acquisition Details
The transaction is anticipated to finalize by March 2027, after which the new entity will operate as the Persistent-Nagarro Group. Should the acquisition succeed, it would significantly advance Persistent’s goal of reaching a $5 billion valuation by FY31. The deal would also position Persistent as the seventh-largest Indian IT services company by revenue.
Persistent has already secured a 21% stake in Nagarro from its largest shareholder, Lantano Beteiligungen, and plans to make a public takeover offer for the remaining shares. The acquisition will be executed through a newly formed German subsidiary, Galaxy Germany Holding.
Strategic Objectives
This acquisition is notable as it represents one of the first large-scale overseas takeovers by an Indian IT services firm acquiring a European counterpart of substantial size. Nagarro serves a diverse clientele, including Siemens, Lufthansa, BMW, Maruti Suzuki, Bajaj FinServ, Assa Abloy, and the City of New York.
Persistent’s bid aligns with its strategic goals of increasing scale, expanding its presence in Europe, and enhancing its digital engineering and AI capabilities. CEO Sandeep Kalra emphasized the company’s ambition to be a leading technology services firm rather than a general-purpose IT provider.
Financing the Deal
The acquisition will be financed through a committed bridge financing facility of €1.4 billion from Barclays Bank, supported by a corporate guarantee of up to €1.5 billion from Persistent. CFO Vinit Teredesai indicated that the debt would incur an annual interest rate of approximately 4.1% to 4.5%. Nagarro co-founder Manas Human explained that the decision to sell was influenced by the need for capital and the belief that the new AI transformation era would present opportunities beyond digital engineering.
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