By Rob Starr, Big4.com Content Manager
When Capgemini recently announced they had entered into a definitive merger agreement to acquire IGATE for a cash consideration of $48 per share, North America effectively became the largest region by revenue for the Paris Headquartered, IT services organization. IGATE is a prominent US-listed technology and services company headquartered in New Jersey with 2014 revenues of $1.3 billion dollars. The merger will also provide a global reach and a wider offering portfolio for IGATE’s clients and new perspectives for its employees.
“What I think is interesting within IGATE is their offering that combines technology and process services. That’s one model on which we’ll build,” he said. In addition, IGATE offers Infrastructure services (3,000 FTEs), Vertical BPO (3,500 FTEs) and Engineering services (3,500 FTEs).
Intellectual property offerings
As well, their intellectual property offerings such as IDMS in analytics are good. Hermelin also touched on some of the new clients Capgemini would acquire as part of the deal mentioning General Electric and Royal Bank of Canada as two of the new notable acquisitions. An estimated 50,000 employees will be servicing these new North American clients.
“There are a few large brands and only one client overlap that we’ve found. You see a very good set of complementary clients and offerings with this merger,” he said noting these new additions go well with the work Capgemini has already done in areas like property and casualty insurance where their business in the United States has already reached $200 million dollars. In fact, the transaction will accelerate the use of Capgemini’s tax loss carry forward in North America.
Hermelin went on to highlight some of the mechanics of Capgemini’s ongoing expansion into the United States.
“When I looked at targeting the U.S., I saw some companies that were in trouble and some of those have been destabilized by the cloud disruption,” he said adding that when he looked at several of those firms, the speed of the decline was faster than the management had imagined. That wasn’t the case with IGATE and the merger process began over a year ago in Pittsburgh with talks with the two founders, ending in the merger with a company that perfectly fits Capgemini’s strategic ambition with, among other things, global employee talent capital of over thirty three thousand.
“I’ve been very active with this for eighteen months,” Hermelin says. “Frankly, for me because of the culture and the management and executives that I met, and the objective to find something very strong in both the U.S. and India, this was the best fit I could find.”