India?s largest IT services exporter, Tata Consultancy Services (TCS), on Tuesday, announced the acquisition of French IT services firm Alti for euro 75 million (about R534 crore) in an all-cash deal. With this acquisition, TCS will strengthen its local footprint in France and drive long-term growth in other parts of Europe. Alti, which has 1,200 employees across France, Belgium and Switzerland, provides IT services in areas including enterprise solutions, assurance and CRM solutions.
A spokesperson for TCS said the transaction will close by end of first quarter of 2014 fiscal and the revenues are expected to be consolidated with those of TCS in the second quarter of FY14. France alongwith Alti acquisition will contribute 200 million euros to TCS revenues.
BNP Paribas Advisory Services was the sole advisor to TCS on the acquisition.
The privately-held company is backed by two private equity funds, CM-CIC LBO Partners and IDI, which supported its growth from a revenue base of 64 million euro in 2007 to 126 million euro ($164 million) in 2012.
N Chandrasekaran, CEO and MD, TCS, said, ?This acquisition underlines our long-term, strategic commitment to France, which is the third largest IT services market in Europe. The acquisition of Alti will help us serve our clients in France and across Europe more comprehensively with an expanded set of services and solutions.?
?Foreign IT firms need to demonstrate strong local presence in European countries like France to be successful. It (the TCS acquisition) is a sensible play in the market as they needed local people,? said Ian Marriott, vice-president of research at IT consulting firm Gartner?s London office. ?The success will be depend on how well acquisition is integrated. They cant afford to lose too many good people of the company,? he said.
The tough economic environment in Europe has led to availability of target companies at attractive prices. ?GDP growth for most European countries has not been very strong. Many large Indian IT firms are looking at acquisitions in Europe,? Marriott said. Cognizant also acquired part of C1 group?s business in Germany in 2012.
Pegged at over 30 billion euros, the French IT-services market is largest in Europe, after the UK and Germany. IT major TCS has been operating in France since 1992 and has over 50 clients in the country Over the last five years, TCS has significantly strengthened its position in the country through local hiring and investments.
In December 2012, New Jersey-based Cognizant acquired six companies of German IT consulting and services firm C1 Group for an undisclosed amount to strengthen its local footprint in Germany and Switzerland and pump up its consulting and enterprise services. In September last year Infosys acquired Lodestone, a Switzerland-based management consultancy firm, for around $350 million.
The buyout gave the Bangalore-based IT services exporter an access to over 200 clients across multiple sectors such as automotive, healthcare and financial services. Infosys has about 125 clients in Europe, with 50% of its revenue coming from the UK.