Persistent to buy German digital engg firm Nagarro, expand Europe presence

The all-cash acquisition, backed by Nagarro's largest shareholder, will expand Persistent's European presence and is expected to take combined annual revenue to about $2.9 billion

Persistent Systems on Saturday announced it will buy German digital engineering company Nagarro for €81 a share in one of the company's biggest deals, which will give the mid-tier IT services firm a greater presence in Europe to boost its revenue.

 

The all-cash deal represents a 140 per cent premium to Nagarro's closing share price on June 25 on the Frankfurt Stock Exchange and about 94 per cent to the three-month volume-weighted average price.

 

Based on the outstanding shares of Nagarro, the deal — according to rough calculations — works out to about €1 billion. Persistent has already secured the backing of Nagarro's largest shareholder, Lantano Beteiligungen GmbH, which has agreed to tender its entire 21 per cent stake in the company.

 

 

“The combination strengthens our position in Europe, expands our scale in North America, and enhances our ability to help clients accelerate their AI and digital transformation journeys,” Sandeep Kalra, executive director and chief executive officer of Persistent Systems, said in a statement.

 

Munich-based Nagarro, which has about 18,500 employees across 40 countries, specialises in the industrial, consumer, technology, media and telecom (TMT), and banking, financial services and insurance (BFSI) sectors, with revenue of €1 billion in 2025.

 

The combined entity will have annual revenue of about $2.9 billion, more than 46,000 employees, AI-led engineering expertise, a deeper presence in Europe, and enhanced ERP and CX delivery capabilities.

 

Speaking to Business Standard in January, Kalra had said the company was looking to expand its presence in Europe and reduce its reliance on the US as its key geographic market, keeping in mind the macroeconomic uncertainty and volatility that had affected almost all IT services players. The aim was to generate about 12–15 per cent of its topline from the continent over the long term.

 

With the acquisition, however, Persistent's European revenue share will increase to 22 per cent from 9 per cent, creating a more balanced revenue profile, with North America accounting for 62 per cent and the balance coming from the rest of the world. The transaction is expected to be earnings-per-share accretive in the first year after completion.

 

Indian IT services firms have been making big-ticket acquisitions over the past year across geographies and capabilities as organic growth has slowed considerably due to volatile macroeconomic conditions and pressure on traditional revenue streams from AI.

 

Coforge bought Encora for $2.35 billion, HCLTech acquired HPE's telecom solutions business for $160 million and Jaspersoft for $240 million. TCS bought Coastal Cloud for about $700 million last year, while Infosys announced the purchase of Optimum Healthcare IT, an American healthcare technology consulting company, for $465 million.

 

“With the AI revolution, we are entering an era that will reward companies like ours that already have a digital-, data- and AI-DNA. It’s a moment of great opportunity, but it also needs scale and power to make the most of it,” said Manas Human, co-founder and chief executive officer of Nagarro.

 

Separately, Persistent said it had signed a deal with a US technology company with a total contract value of $650 million over more than six years. The contract will focus on product development, product support, cloud services operations and support.