Atos and Syntel has entered into a definitive merger agreement under which Atos will acquire Syntel for cash consideration of c. $ 3.4 billion i.e. $ 41.0 per share, representing c. 14% premium over the last 30 trading days volume weighted average share price of Syntel.
Syntel brings a powerful suite of digital and proprietary solutions recognized by top analysts as being among the most advanced: cloud, social media, mobile, analytics, IoT, and automation at c. 40% of Syntel’s revenue. It will significantly strengthen the Group’s Business & Platform Solutions Division worldwide with best-in-class delivery platform generating among the highest margins of the industry.
This transaction expands Atos’s capabilities in North America to provide end-to-end services to US customers. It also strongly reinforces its Banking, Finance & Insurance verticals. C. $ 120 million of annual cost synergies are expected by 2021 from G&A optimization taking advantage of the combined scale as well as the alignment of KPIs in Business & Platform Solutions. A compelling match between the two companies supporting multiple opportunities for revenue synergies, expected to reach c. $ 250 million by 2021, through cross-selling opportunities at both the European and US customer bases.
Transaction is fully supported by Syntel management. Mr Rakesh Khanna CEO of Syntel will become a member of Atos Executive Committee. The transaction is expected to be double digit accretive to Group EPS as early as 2019. The transaction is planned to close by year-end. Both companies’ Boards of Directors have unanimously approved the transaction. Written voting agreements with Syntel shareholders, including founders, to vote in favor of the transaction represent 51% of the outstanding shares.
The Board of Directors of Atos meeting held on July 20, 2018 also expressed its full and unanimous support for the transaction.
Thierry Breton, Chairman and CEO of Atos said: ”I am very proud to announce such an important milestone in Atos’ leadership development with the acquisition of Syntel, a leading digital company, established 38 years ago, that perfectly fits our strategic priorities. It represents a transformational step for our Business & Platform Solutions Division as it will significantly enhance its growth and profitability profile through an extended digital services offering, cutting-edge India-based delivery platforms, as well as revenue and cost synergies.
In particular, the highly complementary portfolio, customer base, and geographic footprint of the combination between Atos and Syntel will significantly enhance our presence in North America and accelerate the digital transformation of Atos’s customers worldwide.
I am looking forward to welcoming the 23,000 Syntel engineers and their very strong management to continue delivering together the highest value to our clients and shareholders.”
Bharat Desai, Co-Chairman and Co-founder of Syntel, said: “This is a very exciting development for Syntel. The Syntel board is committed to maximizing shareholder value and believes that the agreement with Atos achieves that objective and delivers a win-win proposition to our customers and employees.
Our focus at Syntel is to help customers transform and succeed in the digital economy. Since its founding, our “Customer for Life” ethos has guided our investments in high-impact, domain-led services and intellectual property.
I am grateful for the trust and confidence of our customers and the passion, commitment and innovative spirit of our employees. Together they have enabled Syntel to achieve great heights. I am confident that this combination will deliver significant value to all stakeholders.”