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Cognizant Tech to acquire Belcan for $1.3 bn in cash and stock

By Ayushman Baruah
June 11, 2024 20:37 IST
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Nasdaq-listed Cognizant Technology Solutions has signed a definitive agreement to acquire global engineering company Belcan for about $1.3 billion (Rs 10,853.7 crore) in cash and stock.


Photograph: Dado Ruvic/Reuters

The transaction is expected to close in the September quarter.

The total consideration includes $1.19 billion (Rs 9,935.31 crore) in cash and 1.47 million Cognizant shares, valued at $97 million (Rs 809.53 crore) based on the information technology services provider’s closing share price on June 7, 2024.


The cash portion will be funded through a mix of available cash and debt.

Founded in 1958, Belcan is a portfolio company of AE Industrial Partners and a leading global supplier of engineering research and development (ER&D) services.

It provides services for the commercial aerospace, defence, space, marine, and industrial sectors, primarily in North America and the UK.

This acquisition comes when Chief Executive Officer (CEO) Ravi Kumar S is scripting a turnaround at Cognizant to regain its bellwether status.

India is the largest base for Cognizant, with about 250,000 of its total 344,400 employees located here.

The acquisition is expected to meaningfully expand Cognizant’s ER&D capabilities, building upon its strengths in the Internet of Things and digital engineering.

“Combining with Belcan will add scale and enable Cognizant to establish a leadership position in the high-growth aerospace and defence (A&D) industry with a blue-chip client base, deep domain expertise, and significant technological capabilities with over 6,500 engineers and technical consultants,” Cognizant said in a statement.

The revenue contribution from the acquired business to Cognizant in 2024 will depend on the closing date but is expected to exceed $800 million (Rs 6,679.2 crore) on an annualised basis.

The acquired business has grown at an 8 per cent compound annual growth rate (CAGR) over the past two years.

“We believe acquiring Belcan will strengthen Cognizant’s position in the sizeable and fast-growing ER&D services market,” said Ravi Kumar.

“Belcan’s deep engineering capabilities and domain expertise in the A&D market will complement Cognizant’s scale and its multi-decade digital engineering expertise, offering Belcan’s blue-chip clients access to our advanced artificial intelligence, Cloud, and data technologies.”

Ravi Kumar added that Cognizant sees the acquisition as an opportunity to accelerate revenue growth and create compelling shareholder value through the combined engineering capabilities.

“Belcan’s clients will gain access to Cognizant’s full suite of technology services, while Cognizant’s clients across the manufacturing, automotive, energy, and high-tech sectors will benefit from Belcan’s engineering skills,” he added.

As part of this transaction, Cognizant expects to expand its reach in the $190 billion (Rs 15.86 trillion) ER&D services market, projected to grow at a CAGR of over 10 per cent through 2026.

The acquisition is expected to deliver over $100 million (Rs 834.9 crore) in annual revenue synergies within three years, with additional cost synergies expected over time.

Belcan’s US- and UK-based workforce will complement Cognizant’s global delivery network to support global programmes for Belcan’s clients.

Lance Kwasniewski, CEO of Belcan, will continue to lead Belcan, which will operate under its current name as an operating unit of Cognizant.

Cognizant will establish a dedicated integration programme office to drive execution against the strategic and financial goals for the transaction.

“Cognizant will better position our team to capitalise on compelling tailwinds, including increasing outsourced ER&D spend, the transformative impact of digital engineering adoption rates, robust commercial aerospace demand, and favourable long-term defence and space spending,” said Kwasniewski.

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Ayushman Baruah
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