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Atos snaps up IT firm Syntel in $3.57 billion deal

The acquisition has been driven by Atos' need to increase its business footprint in the US.

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Atos has acquired Syntel in a deal worth roughly $3.57 billion.

On Monday, the French digital transformation company said the purchase of Syntel, a Troy, Michigan-based IT company, will give Atos a "powerful suite of digital and proprietary solutions recognized by top analysts as being among the most advanced: cloud, social media, mobile, analytics, Internet of Things (IoT), and automation."

In addition, Atos says the purchase, which was unanimously approved by both companies' boards of directors, will offer Atos the opportunity to expand its footprint in the United States, with a particular focus levied towards banking, finance, and insurance.

The acquisition has been agreed for $3.4 billion, or $41 per Syntel share. Including net debt, the deal is worth $3.57 billion.

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Founded in 1980, Syntel is a global IT company which specializes in core IT application development, intelligent automation, cloud computing, and scaled agile development.

Syntel caters for approximately 22,500 employees. Under the terms of the deal, Syntel CEO Khanna Rakesh will join Atos as an executive committee member.

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Atos believes that bringing the companies together will result in new opportunities for revenue synergies. By cross-selling in both Europe and the US, Atos expects synergies to reach $250 million by the end of 2021 with a $50 million operating margin.

"The highly complementary portfolio, customer basis, and geographical presence of the combination between Atos and Syntel will significantly enhance our footprint, in particular in the North American market and accelerate the digital transformation of Atos' customers," said Thierry Breton, Atos Chairman, and CEO. "I am looking forward to welcoming the 23,000 Syntel employees and their very strong management to continue delivering together the highest value to our clients and shareholders."

The transaction is expected to close by the end of 2018, subject to regulatory approval.

Syntel expects to report revenue of $249.7 million and earnings per diluted share of $0.49 on Thursday.

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