Persistent Nagarro acquisition: 94% stake clears takeover path
Persistent Systems has raised its stake in German software engineering firm Nagarro to 94%, crossing the threshold that enables a squeeze-out of remaining minority shareholders under German regulations. The Persistent-Nagarro acquisition, announced in June, was valued at $1.3 billion, and the company said on 9 October that it plans to squeeze out minority shareholders upon closing, although no final decision has been taken.
Persistent reached 94% ownership after its €81-a-share bid gave it 83% ownership by 17 September, followed by a secondary offer. The company paid about $1.1 billion, including $824 million from tendered shares and $253 million from Lantano’s stake sale.
What Persistent and Nagarro do
Persistent is a Pune-based technology services firm. Nagarro is a German software engineering company with $999 million in revenue and about 18,500 employees in its last fiscal year.
Under German law, holding more than 90% of the target’s shares requires remaining minority shareholders who have not tendered their shares to sell to the acquiring entity. Persistent will then have to merge Nagarro into its German entity and remove the entity from the Frankfurt stock exchange.
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Why the Persistent-Nagarro acquisition matters outside India
Almost half of Nagarro’s revenue comes from European clients, and Persistent expects Europe to account for one-fifth of the combined business after the acquisition, up from one-tenth.
Persistent’s German subsidiary borrowed up to €1.4 billion, or $1.6 billion, from Barclays, with the full loan due within 18 months under the stated terms. Management expects the acquisition to be completed by March next year. Analysts remain split on integration benefits versus execution and dilution risks.
Persistent’s position
“Having secured more than 90% of Nagarro’s share capital and voting rights, Persistent plans a squeeze-out of the remaining minority shareholders of Nagarro upon closing. No final decision has been taken yet,” the company said in its press release on 9 October.
Once complete, the combined Persistent-Nagarro Group will have at least $2.7 billion in revenue.
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