(Bloomberg) -- Atos SE agreed to buy Syntel Inc. for about $3.4 billion in a cash deal that would give the French computer-services company access to large U.S. financial customers including American Express Co. and State Street Corp.
Bezons, France-based Atos will pay $41 a share for the U.S. information technology firm, the companies said in a joint statement Sunday. The per-share figure is 4.8 percent more than Troy, Michigan-based Syntel’s closing price of $39.13 on July 20. The total price is $3.57 billion including Syntel debt, the companies said.
Atos has been seeking to expand in the U.S., among other acquisition priorities, Chief Financial Officer Elie Girard said in late April during a call with journalists following the release of first-quarter earnings. While Syntel gets most of its revenue from the U.S., the bulk of its 23,000-person workforce is in India.
The purchase will be “transformational” for Atos’s Business & Platform Solutions Division, Chairman and Chief Executive Officer Thierry Breton said in the statement. Syntel will enhance Atos’s profile “through an extended digital services offering, cutting-edge India-based delivery platforms, as well as revenue and cost synergies.”
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The deal will “significantly enhance our presence in North America and accelerate the digital transformation of Atos’s customers worldwide,” Breton said.
While Atos’s market capitalization of 13.2 billion euros ($15.4 billion) is almost five times that of Syntel, the American company’s shares have been growing faster. Syntel shares have doubled in the past year, while Atos is little changed.
Syntel’s top three customers -- American Express, State Street Bank and FedEx Corp. -- accounted for 45 percent of its revenue last year, according to an annual report. Its top 10 customers made up 74 percent of revenue, and only about 11 percent of sales came from outside of North America.
Syntel’s net revenue has dropped for the past two years, including a 4.4 percent decline to $923.8 million in 2017. The company has global development centers in India, Scotland, Poland and the Philippines, with 76 percent of its billable workforce located in India, according to Syntel’s annual report.
Atos said it expects the deal to close by year-end, adding to earnings immediately and providing “double-digit accretion as early as 2019” excluding transaction costs and goodwill. The boards of both companies approved the transaction on July 20 and Syntel shareholders holding 51 percent of the stock, including founders, pledged to vote in favor, according to a statement.
The transaction will be financed with debt underwritten by BNP Paribas SA and JPMorgan Chase & Co. Atos plans to hold a conference call on July 23 at 8 a.m. Paris time to discuss the transaction.
(Adds CEO comment in the fifth paragraph. An earlier version of this story was corrected to fix the date in the second paragraph.)
To contact the reporter on this story: Thomas Black in Dallas at tblack@bloomberg.net
To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Kevin Miller, Dan Reichl
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