Cognizant Acquires Belcan For $1.3 Bn

IT player Cognizant has revealed its plans to acquire digital engineering firm Belcan for USD 1.29 billion. The acquisition, to be completed through a combination of cash and stock, is a strategic move by Cognizant to strengthen its foothold in key sectors such as aerospace, defense, space, and automotive industries in North America and the United Kingdom.

According to Cognizant’s statement, the acquisition of Belcan is expected to significantly expand the company’s revenue stream, with anticipated annual revenues growing to USD 800 million. Belcan has seen robust growth, boasting an 8 per cent compound annual growth rate over the past two years, making it an attractive investment for Cognizant.

The financial structure of the deal involves a mix of cash on hand and debt, with Cognizant intending to adjust its share repurchase plan to maintain its current share count guidance for the full year 2024. The acquisition aligns with Cognizant's strategic vision of leveraging Belcan's engineering expertise alongside its own digital capabilities, including AI, Cloud, and Data technologies.

“We believe that acquiring Belcan will strengthen Cognizant’s position in the sizable and fast-growing ER&D services market. Belcan’s deep engineering capabilities and domain expertise across the aerospace & defence market will be complemented by Cognizant’s scale and own multi-decade digital engineering expertise, providing Belcan’s blue-chip client roster access to our advanced AI, Cloud and Data technologies,” said Ravi Kumar S, CEO, Cognizant.

The transaction is expected to be finalised by the end of the quarter ending 30 September 2024, pending regulatory approvals and other customary closing conditions