Capgemini has finalised terms on a blockbuster $4.1 billion acquisition of industry rival Altran Technologies, as part of plans to more aggressively compete with Accenture.
The blockbuster deal - converted from €3.6 billion - sees the coming together of two Paris-based consultancy firms, forming a technology giant in the process.
Specifically, the combined entity will create a group with revenues of €17 billion and more than 250,000 employees globally, in addition to leveraging Altran’s “extensive sector expertise”.
“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,” said Paul Hermelin, chairman and CEO of Capgemini Group. “The complementarity and power of our combined business and technological expertise are truly outstanding assets.”
Hermelin said the combined group will benefit from increased access to "key decision-makers from key accounts" in industries such as aerospace, automotive, life sciences and telecommunications, including R&D, manufacturing and supply chain CxOs.
The transaction also allows Capgemini to accelerate its development with major Internet and tech companies, said Hermelin, through "critical mass" in software engineering through centres of expertise, particularly in India and Eastern Europe.
“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, Internet of Things, artificial intelligence and 5G,” Hermelin added.
Founded in 1982, Altran specialises in the provision of engineering and R&D services, assisting customers from “concept to industrialisation” across the world.
The business generated €2.9 billion in revenue in 2018, housing nearly 47,000 employees in more than 30 countries, including China, India and Japan across Asia Pacific.
“The proposed combination of Altran with Capgemini is perfectly aligned with the vision set out in our strategic plan,” added Dominique Cerutti, chairman and CEO of Altran Group.
“While technological disruptions and the digitalisation of industries are accelerating, Altran has developed new service models and strengthened its leadership with a high value-added offer for its customers’ Engineering and R&D activities.
“In an industry that is consolidating rapidly there is no doubt that Capgemini is the ideal partner to build together a world leader in digital transformation. This transaction will create value for our customers, and is an outstanding opportunity to showcase the talent of our teams.”
Over the medium-term, engineering and R&D (ER&D) services are anticipated to grow by around nine per cent annually. The new entity will become a global leader in ER&D by size, most notably in the USA and in Europe.
The combined scope of these engineering and R&D services activities is expected to represent annual revenues of approximately €3.4 billion and 54,000 professionals, including 21,000 in five Global Engineering Centres.
Building on its track record in industrialization and innovation, Capgemini will strengthen Altran’s deployment of its segmented model of services (high value-added services, traditional services, Industrialized Globalshore®) to support customers throughout the entire life cycle of their products and services.