Persistent Systems Limited

Persistent Systems Limited announced the strategic acquisition of Nagarro, a European-headquartered digital engineering firm, for an enterprise value of €1.27 billion, based on €81 per share in cash. This acquisition aims to create an AI-led digital engineering powerhouse with a combined revenue exceeding $2.9 billion and a global team of over 46,000 members across 40+ countries. Persistent has already secured a 21% stake via a share purchase agreement, with a minimum acceptance threshold of 50% plus one share for the voluntary public takeover offer.

In addition to the acquisition, Persistent announced a major new deal with an existing global technology leader headquartered in the US. This net new deal is valued at over $650 million over a 6.5-year period, contributing more than $125 million annually. Management highlighted this deal as a testament to Persistent's engineering prowess and deep domain expertise, reinforcing confidence in maintaining its 24-quarter streak of growth.

The acquisition of Nagarro is driven by strong strategic alignment and complementary strengths. Nagarro brings significant presence in Europe (contributing 22% to the combined entity's revenue), new verticals like industrial consumer and public sector, and enhanced capabilities in ERP and OpenAI. The cultural fit, characterized by an entrepreneurial and engineering-first mindset, is expected to facilitate integration. The combined entity aims for scaled global delivery, diversified talent, and expanded addressable markets, particularly in Europe and the Middle East.

The €1.27 billion acquisition will be fully funded through a €1.4 billion committed bridge financing facility from Barclays, with an interest rate of Euribor plus 175-250 basis points (4.1%-4.8%). Nagarro's reported net debt is approximately €267 million. The transaction is expected to be Cash EPS accretive and Reported EPS accretive in Year 1, excluding transaction expenses. Initial leverage (Net Debt/EBITDA) is projected at 1.9x-2.5x, with a target to reduce it to 1x by FY2030 through strong cash generation.

Management expressed high confidence in sustaining Persistent's growth momentum and maintaining or improving the combined entity's margins. While Nagarro has experienced recent flat revenue and margin pressure, attributed to past privatization distractions, Persistent believes its rigor and focus will drive a turnaround. The combined entity's EBIT margins are expected to be healthy, with Nagarro reporting 10.9% for CY25 and 12.1% for Q1 CY26. Cost synergies are anticipated, with a significant portion to be reinvested in growth and expansion initiatives.

The voluntary public takeover offer was announced on June 26, 2026, with regulatory filings expected within four weeks. The acceptance period will last four to six weeks. The transaction is anticipated to close in Q4 Calendar Year 2026 or early Q1 Calendar Year 2027. Persistent intends to operate Nagarro as a controlling shareholder, working closely with its management team, with a full squeeze-out planned at the appropriate time^⏳, aligning with mature European public-to-private transaction practices.