Cognizant plans to acquire Belcan for approximately $1.3 billion
Cognizant announced it is signing a definitive agreement to acquire Belcan, LLC (Belcan), a portfolio company of AE Industrial Partners and a leading global supplier of Engineering Research and Development (ER&D) services. The purchase price is approximately $1.3 billion in cash and stock, subject to customary adjustments.
The acquisition will significantly expand Cognizant’s ER&D capabilities, building upon the company’s leadership in the Internet of Things (IoT) and digital engineering practice areas, according to Cognizant.
Combining with Belcan will also add scale and enable Cognizant to establish a leadership position in the high-growth aerospace and defense (A&D) industry with a blue-chip client base, deep domain expertise, and significant technological capabilities with over 6,500 engineers and technical consultants.
The revenue the acquired business will contribute to Cognizant in 2024 depends on the timing of the closing but is expected to be over $800 million on an annualized basis. Revenue from the acquired business has grown at an 8% compound annual growth rate (CAGR) over the last two years.
Belcan is an established player in ER&D that provides mission-critical digital engineering services for a long-standing customer base across the commercial aerospace, defense, space, marine and industrial verticals, primarily in North America and the United Kingdom (UK).
“We believe that acquiring Belcan will strengthen Cognizant’s position in the sizable and fast-growing ER&D services market,” said Cognizant CEO Ravi Kumar S. “Belcan’s deep engineering capabilities and domain expertise across the aerospace and defense market will be complemented by Cognizant’s scale and own multi-decade digital engineering expertise, providing Belcan’s blue-chip client roster access to our advanced AI, Cloud and Data technologies.”
Lance Kwasniewski, the CEO of Belcan, is expected to continue to lead Belcan, which will continue to operate under the Belcan name as an operating unit of Cognizant.
Cognizant will also establish a dedicated integration program office to drive execution against strategic and financial goals for the transaction.
“We are excited about this unique combination and the value creation it will bring to our customers, along with the opportunities it will provide for our employees. Cognizant will better position our team to capitalize on compelling tailwinds, including increasing outsourced ER&D spend, the transformative impact of digital engineering adoption rates, robust commercial aerospace demand, and favorable long-term defense and space spending,” said Kwasniewski. “Belcan’s experienced team has built a growth-oriented business delivering highly complex, mission-critical, scalable services to our long-standing customer base. I look forward to continuing to lead our team as we unite and leverage Belcan’s and Cognizant’s comprehensive services and cross-industry clientele to execute on our collective strategy, ultimately earning the role of our clients’ most trusted partner in intelligent engineering.”
The transaction is anticipated to close in the quarter ending September 30th, 2024, subject to the receipt of required regulatory approvals and other closing conditions.
The total purchase price of approximately $1.29 billion, subject to customary adjustments, comprises $1.19 billion in cash consideration and a fixed 1.47 million Cognizant shares, with a current value of $97 million based on Cognizant’s closing share price on Friday, June 7, 2024. The cash consideration is expected to be funded through a mix of cash on hand and debt.
Cognizant intends to increase its share repurchase plan to maintain current share count guidance of 497 million for the full year 2024.s
Perella Weinberg Partners served as financial advisor and Arnold & Porter served as legal advisor to Cognizant. Jefferies and Solomon Partners acted as financial advisors and Kirkland & Ellis served as legal advisor to Belcan.
For more information about this news, visit www.cognizant.com.