Cognizant Technologies (CTSH.O) announced on Monday that it has agreed to purchase digital engineering startup Belcan for almost $1.3 billion in cash and equity.
The transaction would increase Cognizant’s presence in the aerospace, military, space, and automotive industries. Belcan, headquartered in Cincinnati and controlled by private equity company AE Industrial Partners since 2015, employs 10,000 workers in 60 sites throughout the world. Some of its clients include Boeing (BA.N), General Motors (GM.N), Rolls-Royce (RR.L), NASA, and the United States Navy.
“I’m delighted by the fact that Belcan works in a sector (aerospace and military) that is developing faster than ours, which is information technology services. So it allows us to build on that growth,” Cognizant CEO Ravi Kumar said in an interview with Reuters.
“Belcan’s strengths in engineering and aerospace can be cross-pollinated into Cognizant’s strength areas, which are predominantly industrial manufacturing and automotive. So it’s a cross-pollination of services and the use of distribution networks on both sides,” Kumar explained. “… That’s the synergy we see.”
Cognizant stated that as part of the agreement, Belcan will continue to be directed by CEO Lance Kwasniewski and operate as a Cognizant company.
Cognizant, with a market value of $33 billion, is trying to expand its capabilities in specialized areas as it prepares for a slowdown in client expenditure. It has reduced its annual sales prediction to $18.9 billion to $19.7 billion, down from previous estimates of $19.0 billion to $19.8 billion.
