Capgemini acquires Altran to create a global digital transformation leader
On June 24, 2019 Capgemini, a global leader in consulting, IT services and digital transformation announced that it has entered into an agreement to acquire Altran, a global leader in engineering and research and development (ER&D) through a friendly takeover bid of €14.00 per share of Altran, payable in cash.
The agreement is unanimously recommended and approved by the Board of Directors of Capgemini and Altran. In addition, Capgemini has signed a definitive agreement to acquire shares representing 11% of Altran capital from a group of shareholders led by Apax Partners.
Commenting on the transaction, Paul Hermelin, CEO, Capgemini, said, “This proposed combination enables Capgemini to take the lead in a very promising market segment—what we call ‘Intelligent Industry’ or the digital transformation of industrial and tech companies. By joining forces, we are positioning ourselves as a clear strategic partner to assist our clients in taking full advantage of the revolution created by the developments of the cloud, Edge computing, IoT, artificial intelligence and 5G.”
Founded in 1982, Altran is a world ER&D services firm with a portfolio of high profile clients, extensive sector expertise and in-depth understanding of industrial business processes and operational technologies.
The company spans its operations across 30 countries with 7 world class centers, 4 global delivery centers and over 47,000 employees.
The combination of the two companies will create a group with revenues over €17bn and more than 250,000 employees. The transaction will enable Capgemini to accelerate its development with major internet and technology companies, by giving the new entity a critical mass in software engineering through centers of expertise, particularly in India and Eastern Europe.
The €14.00 per share cash takeover bid represents a 30% premium over the VWAP1 over the month until June 21, 2019 and a 33% premium over the 3 month VWAP1. The total cash consideration amounts to €3.6bn, excluding net debt of c.€1.4bn.
Capgemini share price surged by c.8% after announcement while Altran’s share price increased by c.22%. The deal represents an EV / LTM sales multiple of 1.7x and an EV / LTM EBITDA multiple of 13.2x. Apax Partners realized an IRR of c.16% and a money multiple of c.3.0x.
Cost and operational synergies are expected to range between €70-100m in 3 years (annual, pre-tax basis) with commercial synergies generating between €200-350m in additional revenues over the same period. By 2023, normalized EPS accretion is expected to exceed by 25%.
The new entity will benefit from a unique ability to support industrial players in their digital transformation while Capgemini will reinforce its role as the strategic partner of choice in the Intelligent Industry space, which presents a double digit growth potential.