TCS to acquire French firm Alti for Rs 533 cr

Will get access to a large client base in Europe

Tata Consultancy Services (TCS), India’s largest IT services provider, today said it would acquire France-based Alti SA for euro 75 million (around Rs 533 crore) in an all-cash deal.

The impact of the announcement was evident on the company’s stock, which rose two per cent intra-day on BSE to Rs 1,512 a share, before closing at Rs 1,497 — up 1.1 per cent.

The acquisition, one of the largest for TCS in continental Europe and one of the first by a large Indian IT player in France, signifies how the firm wants to increase its presence in the region beyond the UK.

BNP Paribas was TCS’ sole advisor for the deal.

Alti SA is a privately-held company, owned by its management and two private equity funds — CM-CIC LBO Partners and IDI — which supported its growth from a revenue base of euro 64 million (around Rs 455 crore) in 2007 to euro 126 million (around Rs 895 crore) in 2012. The firm is considered among the five top system integrators of enterprise solutions in France. Its key customers include several top French corporations in banking, financial services, manufacturing, utilities and luxury sectors.

“This acquisition underlines our long-term, strategic commitment to France, which is the third-largest IT services market in Europe. The acquisition would help us serve our clients in France and across Europe more comprehensively, with an expanded set of services and solutions, bringing the best of TCS to French corporations,” said TCS CEO & MD N Chandrasekaran.

TCS has managed to acquire Alti for a discount to its revenue, reflecting the valuation pressure several European companies are facing. “Valuations of European firms, especially in France and Germany, are very attractive. And, the IT firms sitting on cash piles would make use of this opportunity. If you look at comparable multiples of these firms today, those are very low,” said an investment banker on the condition of anonymity.

The acquisition would give TCS a large presence in Europe — France, Belgium Switzerland and Algeria — with an employee base of 1,200.

EXPANDING BANDWIDTH
TCS’ acquisitions so far

• 2005  Comicrom (Chile)
  

$23mn

2005  Pearl Group’s pension & life outsourcing unit (UK)
$94.7mn

2006  TKS-Teknosoft (Switzerland)
$80.4mn

2008  Citigroup Global (Mumbai/Chennai)
$505mn

2012  CRL (Pune)
$34mn

2013  Alti SA (France)
euro 75mn