Cognizant to appoint 3 directors, return $3.4 billion to shareholders

(Reuters) - IT services provider Cognizant Technology Solutions Corp, bowing to pressure from activist investor Elliott Management, agreed to appoint three directors and return $3.4 billion to shareholders.

Elliott disclosed a more than 4 percent stake in Cognizant in November and had urged the IT services provider to take steps to boost shareholder value.

Cognizant said it's board has approved a plan to return $3.4 billion to shareholders over the next two years through share buybacks and dividend.

The company reported fourth-quarter revenue that narrowly missed analysts' estimates while profit beat by a cent.

The company expects to start the repurchase of $1.5 billion worth of shares in the first quarter, initiate a cash dividend of 15 cents per share in the second quarter and repurchase $1.2 billion shares during 2017 and 2018.

Elliott had earlier urged that Cognizant should consider a $2.5 billion share buyback, acquisitions and initiate a dividend, among other measures to boost its shares.

Separately, Cognizant said fourth-quarter revenue rose about 7 percent to $3.46 billion from $3.23 billion helped by ongoing demand for its cloud services.

(Reporting by Rishika Sadam and Supantha Mukherjee in Bengaluru; Editing by Shounak Dasgupta)