Capgemini Agrees to Pay $4 Billion for Apax-Backed Igate in IT Services Deal

NEW YORK (TheDeal) -- Leading European technology services provider Capgemini  (CGEMY) said on Monday that it agreed to pay $4.04 billion in cash for Nasdaq-listed and private equity-backed Igate (IGTE) to gain exposure to the fast-growing North American IT services market.

Capgemini, of Paris, will offer $48 per share for Bridgewater, N.J.-based Igate, a 4.7% premium to the target's Friday closing price of $45.85 and 12% higher than its average price over the past 30 days.

The deal values Igate at an enterprise value of about $4.53 billion, including debt of $686 million and cash on hand of $192 million at the end of 2014. Based on that enterprise value, Capgemini is paying about 15.5 times Igate's earnings of $292 million for 2014 and just under 3.6 times its sales of $1.27 billion.

Igate provides technology, consulting and engineering services to predominantly North American clients. The company's two biggest clients are General Electric (GE), which accounted for 16% of total sales in 2014, and Royal Bank of Canada (RY), which accounted for 10%, according to the group's 2014 annual report.

The acquisition "will give us a new status on the American market," said Capgemini Chairman and CEO Paul Hermelin in a statement.

The deal will boost Capgemini's revenue in North America by about 33% to $4 billion in 2015, equating to about 27% of its total post-acquisition revenue of $12.5 billion. Capgemini made about 21% of its sales in North America in 2014, according to an analyst presentation.

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