Capgemini paid a lot to secure place in the US

1. CAPGEMINI PAID A LOT TO
SECURE PLACE IN THE US
Santosh Kumar Singh

2. CAPGEMINI’S IGATE BUY EXPENSIVE, BUT
JUSTIFIED DUE TO COMPANY'S STRONG
HOLD IN NORTH AMERICA
IGate’s Strong hold in North
America
Deal value is justified given the
IGate's strong foothold in the
North American market, which
has been the biggest outsourcing
market for IT vendors.
Cap Gemini predominantly
serves Europe with over 70%
revenue coming from the region.
After the acquisition, the Europe
share will reduce to a half.
Paid 3.2 times IGate's annual
revenue of $1.2 billion in 2014
This ratio was around 1.6 times
in some of deals in last 4
Deal value is over 15.3 times
IGate's earnings which is
marginally higher than the
Bloomberg median of 14.6 for
similar deals
Capgemini’s IGate buy expensive

3. IGATE’S DEAL VALUE-FURTHER
JUSTIFIATIONS
Capgemini's EPS (earnings per share) is expected to improve by 12% in
CY16 and by 16% in CY17 due to the acquisition
IGate's revenue increased at a three-year compounded annual growth rate
(CAGR) of 18% in 2014
IGate buyout by Capgemini will add IGate’s scale and efficiencies to
Capgemini. IGATE, which has strength in the financial services sector, has
grown quickly since its 1996 stock market listing.
IGATE employs 33,000 people globally, with 75 percent of them in India.
The combined company would have more than 100,000 employees there,
or 48 percent of its workforce.

4. REFERENCE
Economic Times -
http://economictimes.indiatimes.com/tech/ites/capgeminis-igate-
buy-expensive-but-justified-due-to-companys-strong-hold-in-
north-america-experts/articleshow/47076309.cms?intenttarget=no