TCS today announced its intention to acquire 100% equity of Alti SA, a France based IT services/System Integrator company, by signing a definitive agreement for a total cash consideration of Euro75mn (~US$97mn). This private company is jointly owned by company management and private equity funds CM-CIC LBO and IDI .
The salient features of the acquisition are –
- With a CY12 revenues of Euro126mn (US$162mn), the acquisition is valued at 0.6x trailing twelve month sales. This is cheaper than ~1.6x paid by Infosys for Lodestone and ~0.8x paid by Wipro for SAIC.
- Alti SA is a one of the leading IT service provider in France with services around enterprise solutions, assurance and CRM servicing verticals like BFSI, luxury, and manufacturing and utilities.
- Over past five years (CY07-12) the company has witnessed a decent revenue CAGR of 14.5%
- The company has employee strength of 1200 and a client base of 50 (10+ listed in CAC 40 index). Along with France, the company has presence in Belgium and Switzerland too.
Though the revenue/margin impact of this deal on consolidated TCS financials (<1.5% of TTM revenues for TCS) would be insignificant, Alti acquisition is a strategic plus. Being a leading service provider in world’s fifth largest IT market (France), Alti acquisition would add value in terms geographic presence, local delivery base and decent set of mineable clientele. A strong local presence in a generally difficult market for IT outsourcing is also a key advantage in this deal. We maintain our MP rating on TCS.
|Y/e 31 Mar (Rs m)||FY12||FY13E||FY14E||FY15E|
|yoy growth (%)||31.0||28.9||13.8||14.3|
|yoy growth (%)||22.7||31.8||7.2||14.2|
*do not include Alti SA financials
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