Atos will get benefitted from tangible operational improvement by utilising Syntel’s present offshore, robotisation and automation capabilities
US-based Syntel Inc., a leading provider of integrated information technology and knowledge process services has become a wholly-owned subsidiary of Atos, a world leader in digital transformation, Atos announced on Tuesday.
Syntel provides high value-added digital solutions in specific verticals such as banking and financial services, retail, healthcare and insurance. The company earned a revenue of $924 million in 2017 of which 89% comes from North America region.
Commenting on the completion of the deal, Thierry Breton, Chairman and CEO, Atos, said, “With this transaction, we take a new dimension to accelerate the digital transformation of our customers worldwide, while strongly reinforcing our business and platform solutions activities with new clients in North America and a delivery platform from India with a consistent and competitive size to support our customers in their digitalization journeys.”
“We worked extensively to be ready from day one post-closing and to ensure continued delivery of services to our clients while at the same time leveraging the combined strengths of the two groups for profitable growth. In that regards, Syntel will operate as a dedicated unit named Atos Syntel within our Business & Platform Solutions Division,” he added.
Terms of acquisition
According to the agreement terms, announced on July 22, this year and approval by shareholders of Syntel on October 1, Syntel now becomes a fully-owned arm of Atos. The acquisition is valued at $ 3.4 billion and the terms include a repayment of outstanding debt of Syntel for $0.3 billion, which were funded through debt fully underwritten by J.P. Morgan Securities PLC and BNP Paribas. After the acquisition, Syntel will be delisted from the NASDAQ and its shares will be stop trading.
Through this acquisition, the Group is expecting to generate compelling and substantial synergies at revenue as well as cost levels. With combined portfolio and complementary client base of the two companies, the Group will generate opportunities for multiple cross-selling that would lead to expected revenue synergies of $250 million by 2021.
Estimated cost benefit
Atos will also get benefitted from tangible operational improvement by utilising Syntel’s present offshore, robotisation and automation capabilities. Cost synergies are estimated to be created by applying best practices of Syntel on the prevailing Atos’ Business & Platform Solutions operating model. The overall cost benefits are expected to $120 million a year on a basis of run rate by 2021, with a linear phasing. Syntel will be merged into the financial statements of the Group from November 1, 2018.
