Persistent Systems shares fall after planned all-cash acquisition of Germany’s Nagarro

Persistent Systems Shares Crash Nearly 11%, Nagarro Acquisition Deal Creates $2.9 Billion AI Engineering Giant

Mumbai: Shares of Persistent Systems plunged nearly 11 percent on Monday after the company announced its plan to acquire Germany-based digital engineering firm Nagarro in a major international deal.The stock dropped 10.91 percent on the BSE to Rs 4,312.15, touching its 52-week low. On the NSE, the shares fell 10.93 percent to Rs 4,312.The sharp fall reflects investor concern over the acquisition size, possible integration challenges and near-term financial pressure. NCLT Approves Merger Of Persistent Systems' Wholly-Owned Subsidiary Arrka Infosec To Simplify Corporate StructureMajor Acquisition DealPersistent Systems said the acquisition will help create a global AI-led digital engineering powerhouse with a revenue run-rate of $2.9 billion.The deal will be executed through Galaxy Germany Holding SE, a wholly-owned subsidiary of Persistent Systems.The company has announced a voluntary public takeover offer for all outstanding shares of Nagarro at €81 per share in cash.This follows the signing of a Business Combination Agreement between both companies.Capillary Technologies Wins Five-Year $20 Million Deal With US Fortune 50 RetailerStrategic ExpansionPersistent described Nagarro as a strong strategic fit for its business.The company believes the acquisition will strengthen its presence in Europe while expanding capabilities in AI, digital engineering, enterprise resource planning (ERP), and customer experience solutions.Persistent already has strong operations in North America, while Nagarro brings deep European market access and expertise across multiple industries.Together, both companies aim to serve clients more effectively across technology-driven sectors.IT Stocks Plunge Upto 7 Per Cent On AI Disruption Fears, Sector Emerges Top Market DraggerBigger Global FootprintAfter the merger, the combined entity will employ more than 46,000 people across 40+ countries.This includes around 37,000 employees in India, nearly 3,500 in North America, and about 3,000 in Europe.Nagarro, headquartered in Munich, has around 18,500 employees and reported annual revenue of €1 billion in CY25.Although the acquisition strengthens Persistent’s long-term growth story, the market’s immediate reaction shows investors remain cautious about execution risks and deal costs.Disclaimer: This article is for informational purposes only and not investment advice. Investors should consult financial advisors before making investment decisions.

2 hours ago

Persistent Systems shares slide 7% after $1.14 billion offer to buy Germany's Nagarro

Persistent Systems shares plunged 7.83% to Rs 4,462.50 in Monday's trade after the IT services company unveiled plans to acquire Germany-based digital engineering firm Nagarro in an all-cash deal valued at approximately EUR 1.27 billion.While the acquisition marks Persistent's biggest strategic bet to expand its European footprint and accelerate its long-term revenue ambitions, analysts at Elara Securities believe the transaction could weigh on the company's growth and profitability in the near term. The brokerage has maintained its 'Sell' rating on the stock with an unchanged target price of Rs 4,280.Persistent has already secured a 21% stake in Nagarro, with the German firm's largest shareholder agreeing to tender its entire holding under a binding agreement. The company expects to cross the minimum acceptance threshold of 50% plus one share required to complete the takeover.The acquisition will be financed through a EUR 1.4-billion committed bridge loan from Barclays, with the deal valued at around 1.2x CY26 estimated EV/Sales.The acquisition is aimed at reducing Persistent's heavy dependence on the US market, which currently contributes nearly 80% of its revenue, while strengthening its presence across Europe. It also supports the company's target of reaching $5 billion in revenue by FY31 through a mix of organic and inorganic growth.Nagarro will also give Persistent access to new industry verticals, including Retail, Automotive, Energy and Travel, complementing its existing strengths in Banking, Financial Services, Healthcare and Technology.The combined entity is expected to generate nearly $2.9 billion in revenue, employ over 46,000 professionals across 40+ countries, and create a larger AI-led digital engineering platform.Premium acquisition raises concernsPersistent has offered EUR 81 per Nagarro share, representing a premium of around 140% to the undisturbed closing price before the announcement and nearly 94% above the three-month average trading price.Elara believes the premium appears steep, particularly given Nagarro's relatively weaker financial performance. Over the past three years, Nagarro delivered a 5% revenue CAGR, significantly below Persistent's 18% dollar revenue CAGR. The German company also lags Persistent on profitability and operating margins.Although the valuation appears reasonable on an EV/Sales basis, Elara expects the acquisition to dilute the combined revenue growth and margin profile over the near term, prompting it to reiterate its 'Sell' recommendation with a target price of Rs 4,280.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

6 hours ago