Cognizant to acquire engineering company Belcan for $1.3 billion, expecting revenue slowdown

Information technology services provider Cognizant Technologies said on Monday it has agreed to acquire digital engineering firm, Belcan for nearly $1.3 billion in cash and stock, Reuters reported.

Figurines with computers and smartphones are seen in front of Cognizant's logo in this illustration taken(REUTERS)
Figurines with computers and smartphones are seen in front of Cognizant’s logo in this illustration taken(REUTERS)

The deal would expand Cognizant’s footprint in the aerospace, defense, space and automotive sectors.

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Cincinnati-based Belcan, which has been owned by private equity firm AE Industrial Partners since 2015, employs 10,000 people across 60 locations globally.

Some of its clients include Boeing, General Motors, Rolls-Royce, the U.S. space agency NASA and the U.S. Navy.

“I’m excited about the fact that Belcan operates in a sector (aerospace and defense) which is actually growing faster than the sector we are operating in, which is IT services,” Ravi Kumar, Cognizant’s CEO said in an interview with Reuters. “So, it gives us an opportunity to evolve on that growth.”

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“The capabilities that Belcan has, which is engineering and aerospace, can actually be cross-pollinated into the Cognizant strength area, which is primarily industrial manufacturing and automotive, ” Kumar added. “So, it’s a cross-pollination of services on both sides and the leverage of distribution networks on both sides.”

Cognizant said that as part of the deal, Belcan would continue to be led by its CEO Lance Kwasniewski and operate as a unit of Cognizant, according to the report.

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Cognizant, which has a market cap of $33 billion (Rs.2.75 lakh crore), is looking to strengthen its offerings in specialized areas as it braces for a slowdown in spending from clients.

It has cut its annual revenue forecast in the range of $18.9 billion to $19.7 billion, below prior expectations of $19.0 billion to $19.8 billion.

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