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  • Writer's pictureChesapeake Group

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.”

About Altran:

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.

Transaction overview:

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.


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