Capgemini Buys IGATE for $4 Billion

PARIS--French computer services and technology company Capgemini said Monday it will buy U.S. peer IGATE for $4 billion, making North America the French company's largest market.

Capgemini, which reported EUR2.76 billion ($3 billion) in revenue in the first quarter of 2015, said the acquisition of IGATE will bring total group revenue to EUR12.5 billion in 2015. The merged group would have around 190,000 employees and an operating margin of 10%, Capgemini said.

The merger has been agreed by the boards of both companies and a majority of IGATE shareholders.

"It will give us a new status on the American market," Paul Hermelin, Capgemini chief executive said.

Capgemini has for some time been targeting an expansion of its presence in North America, which the French company says is the most innovative technology and services market in the world. North America was also Capgemini's strongest region in the first quarter with a 34% growth in revenue, buoyed by a stronger dollar against the euro. IGATE's customers in North America include General Electric and Royal Bank of Canada, Mr. Hermelin told reporters.

The acquisition will be part funded by Capgemini's own cash as well as an increase in its capital, the French company said. The capital increase would dilute existing shareholdings by no more than 6%. The rest of the acquisition will be financed in debt.

Mr. Hermelin added that the company doesn't plan any more major acquisitions in the coming two years.

Write to William Horobin at [e-mail]

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