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Atos Makes Surprise Acquisition in PLM Services
An Unexpected PLM Services Acquisition by Atos This is a move we did not expect: French
M&As: Many Tuck-In Acquisitions and Cognizant ESG
ER&D vendors continue to be very active in M&As, with many tuck-in acquisitions. AFRY is now in full acquisition mode with six transactions in 2021 YTD. Competitor Sweco has also accelerated with four transactions. Accenture has made an unusual transaction by taking over a manufacturer of industrial automation and robots in Brazil for Accenture Industry X. Finally, Cognizant acquired a significant German automotive ER&D vendor, ESG.
Capgemini Phasing Out the Altran Brand and Launching Capgemini Engineering
Capgemini is phasing out the Altran brand and launching Capgemini Engineering. Capgemini Engineering will group the activities of Altran and Capgemini Digital Engineering Services (DEMS).
Capgemini Betting on Altran To Reach its New 2025 Financial Objectives
Capgemini unveiled its new financial objectives for the 2020-2025 period, of which Altran will play a significant part. The company now targets a 7 to 9% annual revenue growth at cc and an adjusted EBIT margin of 14% by 2025. Capgemini will reach revenues in the range of EUR 22.2-24.4bn by 2025 (from an estimated pro-forma EUR 16.3bn in 2020) and EUR 3.1-3.4bn in adjusted EBIT (from EUR 1.5bn in 2020).
Hitachi Buys GlobalLogic for USD 9.6bn. A Shock to the ER&D industry
The Hitachi USD 9.6bn acquisition of GlobalLogic was a shock to the engineering and R&D service industry. Hitachi values GlobalLogic 37.4x its calendar 2021 adjusted EBITDA. The multiple is very high, even for a firm of the quality of GlobalLogic. Only three years ago, Apax sold its 48% stake in GlobalLogic to Switzerland-based Partners Group. At the time, the transaction valued GlobalLogic USD 2bn. Back then, the USD 2bn valuation seemed in line with the Aricent and Luxoft respective acquisitions by Altran and DXC.
Nuclear Engineering Remains Promising for Assystem
Nuclear engineering remains promising for Assystem. Revenues of nuclear engineering proved slightly more resilient during 2020 (with a 4.2% revenue decline at cc/cs) than the company itself (-5.3%). In H1 2020, the activity was impacted by the lockdown in Europe, as nuclear engineering requires a higher level of onsite work than ER&D services. Revenues bounced back in H2, reaching a slight organic growth.
An Integrated AFRY: Repositioned around Digital and Sustainability
AFRY recently unveiled its strategy: the company plans to become more integrated and positioned around digital technologies and sustainability. AFRY has suffered in the past few years of a lack of organic growth. In 2019, right before the pandemic, the company grew organically by 1.9%, underperforming most competitors. Then came 2020, and AFRY handled the crisis well, with an organic decline of only 6.4%
Akka Shifts its US Strategy and Goes India-Centric
Akka Technologies made a significant shift in its US strategy with the appointment of Dharam Sheoran. Mr. Sheroan joined from Wipro and must have been an ideal candidate for Akka. At Wipro, he headed several global service lines, including automotive and A&D. His experience, therefore, matches Akka’s presence and ambitions in the country.
Assystem Betting on Long-Term with Acquisition in India
Assystem is betting on the long-term with its 99% acquisition of an Indian engineering firm, STUP Consultants. STUP is headquartered in Mumbai, had revenues of approximately EUR 20m and a headcount of 1.1k. It provides transport infrastructure engineering services, mostly around highways, railways, metros, and airports. The company is also present in water treatment and energy engineering.
Icon Acquires PRA to Double its Size
Icon made a step change in the clinical trials CRO market with its USD 12bn planned PRA Health Sciences acquisition. The purpose of the transaction is scale. With PRA Health Services, Icon will double its size.
Sweco Profitable Despite Write-Down in Germany
Sweco Was Profitable in Q4 despite the Write-Down Swedish infrastructure engineering Sweco remained profitable despite a
UPDATED: Akka Completes its Capital Increase. More Restructuring
Akka had a busy end of the year: it completed its capital increase and unveiled a
More of the Same for SII in its Q3 FY21
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Segula Acquires the Automotive Engineering Unit of Safran in Spain
French ER&D service vendor, Segula Technologies, acquired the automotive unit of Safran Engineering Services in Valladolid, Spain. The acquired unit is small (with a headcount of 81 engineers). It mostly services Renault.
DXC Turns Down Atos’ Bid as Low
Unsurprisingly, DXC Technology turned down Atos’ offer to acquire the firm. DXC considered it, USD 10bn, as reported by Reuters, as too low. The company considers it is going through a turn-around. Also, 16 months into the job, DXC’s CEO, Mike Salvino, believed it was too early to sell the Tysons, VA-based firm.
With Softvision, Cognizant Is Building A New EPAM
In the past three years, Cognizant has been building Softvision as a new EPAM. Like EPAM, Softvision has grown very fast: Softvision 10-12k employees currently, from 2.8k employees at the time of its acquisition in late 2018.
Charles River Gains Large Molecules Expertise, Targeting Biotechs
Charles River Labs (CRL) will gain further expertise for biotechs. The company is to acquire San Francisco-based Distributed Bio, a large molecules specialist firm focusing on antibody discovery. Distributed Bio will become part of CRL’s core R&D business, Discovery & Safety Assessment.
UPDATED: Atos Approaches DXC in a USD 10bn Transaction
Following a Reuters news release, European IT services vendor Atos confirmed it had submitted to the Board of DXC an unsolicited non-binding offer to acquire the firm. The offer is at a preliminary stage. Reuters estimated Atos’ offer to USD 10bn.
UPDATED: Sweco Issues Profit Warning After German Operations Review
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Jacobs Spends USD 1.8bn on PA Consulting to Keep It Independent
Jacobs surprised us with its intention to acquire a 65% stake in PA Consulting for USD 1.8bn (enterprise value of the stake). For those of us that have been in the industry, we know that consulting acquisitions can be risky. Think of EDS and AT Kearney, Capgemini and Ernst & Young Consulting, or IBM and PwC Consulting.
PA : Jacobs Acquires Outside of its Core US Government and Engineering Markets
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Globallogic Acquires in Digital and IT Services
Globallogics made an acquisition in IT services with ECS. ECS brings precious digital capabilities including cloud and agile/DevOps.
Alten Makes its Largest Acquisition Ever, in Digital
Alten is to make its largest acquisition, with Milan-headquartered SDG Group. SDG has revenues of EUR 76m and a headcount of 950. Its operating margin is ~10%. We estimate the price paid by Alten to ~EUR 60m.
SII Performed Very Well This Quarter. Really?
At first glance, SII performed very well during calendar Q3 2020 (corresponding to its Q2 FY21). Revenues were down by only 4.5% yoy at cc/cs. By comparison, Alten’s revenues were down by 19%! SII continued to overperform its French and European peers by a very significant margin.