In one of the largest cross-border acquisitions by an Indian IT services company, Persistent Systems has launched an all-cash bid to acquire Germany's Nagarro for about $1.3 billion, according to Business Today. The transaction could create a $2.9-billion digital engineering and AI powerhouse with more than 46,000 employees.
Deal Structure and Financing
Persistent has offered €81 a share for Nagarro, representing a 140% premium to the stock's closing price on June 25 and a 94% premium to its 3-month volume-weighted average price, the source reported. The transaction is expected to close by March 2027, after which the combined entity will operate as Persistent-Nagarro Group. If the acquisition goes through, it would take Persistent more than halfway towards its aspiration of becoming a $5-billion company by FY31.
| Metric | Value |
|---|---|
| Deal value | ~$1.3 billion |
| Offer price per share | €81 |
| Premium to June 25 close | 140% |
| Premium to 3-month VWAP | 94% |
| Expected close | March 2027 |
| Combined revenue target aspiration | $5 billion by FY31 |
The transaction is being funded through a committed bridge financing facility of €1.4 billion from Barclays Bank, backed by a corporate guarantee of up to €1.5 billion from Persistent. Persistent CFO Vinit Teredesai said the debt would cost the company about 4.1%-4.5% in annual interest, according to Business Today.
Strategic Rationale
The deal would catapult Persistent into becoming the seventh-largest Indian IT services company by revenue, the source stated. Persistent has already agreed to acquire a 21% stake in Nagarro from its largest shareholder, Lantano Beteiligungen, and will subsequently make a voluntary public takeover offer for the remaining shares. The transaction will be executed through a newly-incorporated German subsidiary, Galaxy Germany Holding.
The acquisition is significant because it would rank among the first large-scale overseas takeovers in which an Indian IT services company acquires a European peer of meaningful scale, reversing the more common pattern of consolidation among European technology firms.
Nagarro counts Siemens, Lufthansa, BMW, Maruti Suzuki, Bajaj FinServ, Assa Abloy and the City of New York among its key customers. Like the LTIMindtree merger and Coforge's acquisition of Encora Holdings, Persistent's bid for Nagarro is driven by three strategic objectives: gaining scale, expanding its European footprint and deepening its digital engineering and AI capabilities.
Executive Commentary
“We have always said we want to be the best technology services firm, not a general-purpose IT services firm. As a combination, we would look to be the second-largest business engineering player globally and the seventh-largest technology services company from an India-listed landscape,” Persistent CEO Sandeep Kalra said, as quoted by Business Today.
Explaining why Nagarro chose to sell, co-founder Manas Human said, “One was access to capital, which is slightly more challenging in Europe. Second, we believe the new AI transformation era will create opportunities beyond digital engineering.”
Next Milestone
The transaction is expected to close by March 2027, subject to regulatory approvals and the successful completion of the public takeover offer for remaining shares.
Sources:
