Newsletter
Indian IT company Persistent Systems has announced a takeover offer for German digital engineering firm Nagarro, in what could become one of the largest overseas acquisitions by an Indian IT services company.
Why does this matter: if the deal goes through, the combined company will generate nearly $2.9 billion in annual revenue and employ more than 46,000 people across more than 40 countries.
More importantly, it gives Persistent exactly what it's been looking for: a much stronger foothold in Europe and together, the two aim to build a global AI-led technology powerhouse.
Nagarro is a major player in digital engineering, enterprise software and customer experience, while Persistent brings expertise in AI, cloud and enterprise modernisation.
The acquisition also supports Persistent's long-term ambition of reaching $5 billion in annual revenue by 2031.
The hurdles: Persistent first needs at least half of Nagarro's shareholders to agree to sell their shares. It has already secured a deal to buy a 21% stake from Nagarro's biggest shareholder and is offering €81 per share to everyone else, more than double the current market price.
The acquisition won't come cheap either. Persistent plans to borrow up to €1.4 billion (around $1.6 billion) from Barclays to help pay for the deal and clear Nagarro's existing debt. The final loan amount will depend on how many shareholders accept the offer.
While Nagarro has been growing slower than Persistent and earns lower profits, analysts believe the acquisition could pay off in the long run. A bigger presence in Europe and room to improve profitability could make this one of Persistent's most important deals yet.
