France's Altran buys out Aricent from KKR for $2 bn

The US-based design & engineering services firm, Aricent, has over three-fourths of its workforce in India

The Paris-based technology company Altran said it would buy design and engineering services firm Aricent from a group of investors led by KKR for $2 billion.

The US-headquartered Aricent has over 10,500 employees, a majority of whom operate at centres located in India, who cater to the needs of the firm’s global clients. The firm competes with Indian IT service providers such as Wipro, HCL Technologies, Tata Consultancy Services and Tech Mahindra to sevice clients globally.

Altran has made several acquisitions in the recent past, including the Bengaluru-based product engineering company GlobalEdge Software, the Pune-based Pricol technologies and the Bengaluru-based Sicon Design technologies.

“Altran will now have superior scale and scope, and master all criteria necessary to lead the industry-  a global presence and reach, leadership across most industries, strong expertise in key technology domains and a superior global delivery supply chain,” said Dominique Cerutti, Chairman & CEO of the Altran Group in a statement.

Aricent was earlier known as Flextronics comprising the Delhi-based Hughes Software Systems and the Chennai-based Future Software communications.  The company was acquired by KKR almost a decade ago for almost $900 million and has strong employee base of 10,500 staff members, most of whom are located in India. It has operations in Chennai, Gurgaon, Hyderabad and Bengaluru.

Aricent is one of the first investments by the New York-headquartered KKR in India.

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“We are well-positioned to merge our engineering and design capabilities with those of Altran to create a global leader in R&D engineering services with enormous scale, unparalleled capability, and unique and differentiated innovation. We look forward to working closely with Dominique Cerutti and his leadership team to bring even greater value to our clients,” said Frank Kern, CEO, Aricent.

Aricent brings design and engineering capabilities to help its clients get to market faster, transform legacy products to digital, and create new revenue opportunities. Among the company’s assets is the iconic brand frog.

With this acquisition, Altran is expected to complete the operational and financial objectives of the Altran 2020 Ignition plan as early as 2018 and will be in a position to accelerate and capture emerging demand and new opportunities, said the company. 

Altran expects a profit boost of over €50 million from additional revenue and cost cuts arising out of these acquisitions.

The latest acquisition is expected to generate €150 million of additional revenues, translating into €25 million EBITDA run-rate synergies and €25 million of delivery and cost synergies, claimed the Nasdaq-listed Altran.