French tech major Atos buys Syntel for $3.4 bn to expand North America footprint, reach 'global scale'

New Delhi: French IT services group Atos on Monday said its $3.4 billion acquisition of US information technology group Syntel will help the French firm enhance its footprint, especially in the North American market and accelerate the digital transformation of its customers.

The French company had announced the acquisition on Sunday. Atos said in a statement that it would acquire Syntel for $41 per share which amounts to around $3.4 billion.

"This transaction is a major step in the strategy of Atos to reach a global scale," the French company said.

"In particular, the highly complementary portfolio, customer base, and geographic footprint of the combination between Atos and Syntel will significantly enhance our presence in in the North American market and accelerate the digital transformation of Atos customers," Breton said in a statement.," said  Atos Chairman and chief executive Thierry Breton.

Both Atos and Syntel have a significant presence in India. Syntel, which has 23,000 engineers in 30 countries, has over 18,000 staff based in India. Atos has about 16,000 people.

All of Syntel's management team is expected to join Atos.

Atos Chairman and CEO Thierry Breton. Reuters

Atos Chairman and CEO Thierry Breton. Reuters

Atos, which reported its financial performance for the first half of 2018 today, saw revenue grow 1.7 percent to over 6 billion euros. However, its revenue and operating margin were lower in North America year-on-year in the reported period.

Syntel generated revenues of $924 million in 2017, of which 89 percent was in North America. About 40 percent of its revenues are driven by a suite of digital and proprietary solutions around cloud, social media, mobile, analytics, Internet of Things and automation.

Its operating margin -- underlying profits measured as a proportion of sales -- stood at 25 percent.

Atos said the total cost benefits were estimated at $120 million per year.

Post the transaction (expected by year-end), Syntel CEO Rakesh Khanna will become a member of Atos Executive Committee.

Syntel's co-founder and co-chairman Bharat Desai said the tie-up "is a very exciting development for Syntel. The Syntel board is committed to maximising shareholder value and believes that the agreement with Atos achieves that objective and delivers a win-win proposition to our customers and employees."

 

-- With inputs from AFP


Updated Date: Jul 24, 2018 12:19 PM