Nagarro is headquartered in Munich and develops full-stack solutions across digital engineering and intelligent enterprise, with industrial, consumer, technology, media and telecommunications (TMT), and banking, financial services and insurance (BFSI) verticals. Nagarro had total revenue of €1 billion in CY25.
It has about 18,500 employees spread across 40 countries (with 13,500 in India, 3,000 in Europe, 500 in the US and 1,500 in other geographies). About 35 per cent of revenue comes from North America, 30 per cent from Central Europe, 13 per cent from the rest of Europe and 23 per cent from the rest of the world. Nagarro's CY25 topline is around 65 per cent of Persistent's FY26 revenue.
Nagarro has 10 verticals, of which automotive, manufacturing and industrial contribute 25 per cent of revenue, retail contributes 13.5 per cent and financial services contribute 12.4 per cent. The company had an adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) margin of 13.8 per cent and an EBIT margin of 8.3 per cent in CY25 (in Q1 CY26, the Ebitda margin was 15.6 per cent and the EBIT margin 12.1 per cent). Persistent has appreciably higher margins.
Together, Persistent and Nagarro will be a $2.9 billion entity with 46,000 employees across more than 40 countries. The acquisition will open new markets for both, with $1.7 billion revenue exposure in North America and over $600 million in Europe. There will be a $500 million presence in three verticals — BFSI, healthcare and life sciences (HLS), and TMT — with over $400 million in industrial and over $300 million in consumer. Strategically, the deal could position the combined entity as the second-largest digital engineering company globally and the seventh-largest Indian technology services company.
The deal should be earnings-accretive and cash-accretive from the first year (excluding transaction costs). This will be an all-cash transaction. Persistent has already bought a 21 per cent stake from the largest shareholder, Lantano Beteiligungen GmbH, and has secured commitments for tendering from the management team representing 13-14 per cent. It will make an open offer to other shareholders at €81 a share (a 140 per cent premium to the June 25 price and a 94 per cent premium to the three-month volume-weighted average price), implying an equity value of €1 billion and an enterprise value of €1.2 billion.
Persistent has secured a bridge loan of €1.4 billion to finance the deal, which is expected to close by Q4 CY26 or Q1 CY27, subject to regulatory approvals and securing minimum acceptance of over 50 per cent of shares in the open offer. The loan is from Barclays Bank PLC, with an 18-month tenure, priced at EURIBOR plus 175-250 basis points, implying an effective interest rate of between 4.1 per cent and 4.8 per cent.
Persistent will run Nagarro as a separate entity for two years after the closure, with the existing management running the business. Around 30 per cent of the acquisition value will be recorded as intangible assets (amortised over eight years), while 70 per cent will be recognised as goodwill.
This fits Persistent's target of reaching $5 billion in revenue by FY31. In parallel, Persistent has inked a long-term agreement with a US-based global technology firm, representing a net win with a total contract value of over $650 million over 6.5 years.
Persistent's geographic exposure changes with the deal. The combined entity will have a revenue mix of 62 per cent from North America, 22 per cent from Europe and 16 per cent from the rest of the world. But Nagarro's growth trajectory, with a three-year annual growth rate of just 5 per cent, trails Persistent's 19 per cent annual growth and is a key monitorable. The execution risk is significant given the deal size relative to Persistent's current turnover.
The new entity brings in 180 new logos with over $1 million in annual revenue run rate and minimal overlap with Persistent's existing clients. Nagarro's clients include Siemens, Lufthansa and SAP. It also has verticals and service lines that are new to Persistent. Nagarro is a formally designated implementation partner of OpenAI globally and gives Persistent entry into the Middle East and Japan.
Although the extended geographic reach and diversification make logical sense, the premium paid is justifiable only if there is a sharp improvement in margins and an acceleration in growth. Persistent's current valuation is around 33 times estimated FY27 earnings (prior to the deal). The combined entity is likely to see a slower growth rate, which has led to a sell-off.
 "Persistent Systems")