Indian professional services firm Cognizant will buy TriZetto Corporation for $2.7 billion in cash
Privately-held TriZetto is a healthcare IT software and solutions Indian professional services firm.
"Healthcare is undergoing structural shifts due to reform, cost pressure and shifting responsibilities between payers and providers. This creates a significant growth opportunity, which TriZetto will help us capture," said Francisco D’Souza, CEO of Cognizant.
Cognizant will use TriZetto to accelerate its market position and healthcare software and solutions. The firm will get software platforms used by payers and providers, new engagement opportunities, and around $1.5 billion of potential revenue synergies cumulatively over the next five years.
Healthcare currently represents approximately 26 percent of Cognizant’s revenue.
TriZetto has 3,700 staff and will be a part of Cognizant’s existing healthcare business, which currently serves more than 200 clients, including 16 of the top 20 U.S. health plans and four of the top five pharmacy benefit management companies.
Jude Dieterman, President and COO of TriZetto. "Our agreement with Cognizant advances our vision of simplifying healthcare for everyone."
Gordon Coburn, President of Cognizant. "This acquisition is a natural fit for us. It represents a great opportunity to integrate services across our three horizons — traditional IT services; high-growth businesses such as management consulting, business process services and IT infrastructure services; and emerging delivery models — and provide even greater value to our clients."
"The transaction is expected to be immediately accretive to Cognizant’s non-GAAP EPS, excluding one-time transaction costs and adjustments," said Karen McLoughlin, CFO of Cognizant. "That earnings benefit is expected to increase over time as we realize significant revenue synergy potential from the combination of these businesses."
Cognizant intends to finance the transaction through a combination of cash on hand and debt, and has secured $1 billion of committed financing in support of the transaction. The transaction is expected to close in the fourth quarter of 2014.
Cognizant was advised by Credit Suisse, UBS Securities LLC and Centerview Partners. Legal counsel to Cognizant was provided by Latham & Watkins LLP and Nishith Desai Associates. TriZetto was advised by JP Morgan Securities LLC and Goldman, Sachs & Co. Legal counsel to TriZetto was provided by Kirkland & Ellis LLP.