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Leadership / Digital Transformation

Atos to Expand its Influence in the US with £2.5 Billion Purchase of Syntel

French IT services multinational ATOS has agreed to buy Michigan-based integrated technology provider Syntel Inc. for $3.4 billion (£2.5 billion) in an all-cash deal.

Syntel provides three core offerings, cloud migration, data modernisation through the upgrade of legacy systems and automation-powered user interface modernisation.

Its main business focus is in the US, with American Express, State Street Bank and FedEx Corp. its three largest customers.

Atos is increasing its capability to spread into the US market with the planned acquisition of Syntel. It is expected to increase Atos operating margin to 24 percent.

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Atos CEO Thierry Breton said in a statement that the acquisition “represents a transformational step for our Business & Platform Solutions Division as it will significantly enhance its growth and profitability profile through an extended digital services offering, cutting-edge India-based delivery platforms, as well as revenue and cost synergies.”

“In particular, the highly complementary portfolio, customer base, and geographic footprint of the combination between Atos and Syntel will significantly enhance our presence in North America and accelerate the digital transformation of Atos’s customers worldwide,” he added.

The merger will see Syntel’s 23,000 management and engineer workforce join the French company upon completion of the acquisition.

While completion is still subject to approval by Syntel shareholders. Yet, according to both companies Atos have entered into an agreement with a group of shareholders who hold 51.07 percent of the shares that they have committed their vote in favour of the merger.

Syntel Co-Founder Bharat Desai, commented in the announcement: “The Syntel board is committed to maximizing shareholder value and believes that the agreement with Atos achieves that objective and delivers a win-win proposition to our customers and employees.”

“I am confident that this combination will deliver significant value to all stakeholders,” he added.

Numbers

Atos today announced strong growth in its first half financial report, where it reported revenues of £5,352 million, up by 3.4 percent.

Thierry Breton, CEO of Atos stated that: “By leveraging the strengths of all our Divisions in our Digital Transformation Factory, we signed very large transformation contracts translating in a strong book to bill ratio in each Division and 117% for the Group.”

“The commercial activity was particularly high in North America in Q2 with a book to bill ratio at 190%. In the meantime we continued to closely monitor our operational efficiency, improving the Group profitability and increasing EPS by circa 8 %. In this context, we confirm all our objectives for 2018 towards our 2019 Ambition.”

Meanwhile, Syntel Inc. saw its revenue decrease last year by 4.4 percent from £735 million down to £703 million.

Atos is also on the verge of competing its deal to buy SIX Payment Services by Wordline, a digital payment commercial acquiring and financial processing service, which is expected to close at the end of the year.
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CBR Staff Writer

CBR Online legacy content.