French IT firm Atos acquired US IT firm Syntel this weekend, a deal worth $3.4 billion. The deal will give Atos exposure to US firms and better equip the company with knowledge about certain aspects of the IT industry.
Syntel has expertise in cloud services, social media and mobile analytics, and more, which are all very important knowledge bases in IT sector. Plus, because Syntel is based in Michigan, it has access to more North American clients than Atos. The French firm’s sales in the US dropped unexpectedly in the first quarter of 2018, which encouraged them to make this change.
Syntel’s biggest clients include American Express, State Street Bank, and FedEx, which generate 45 percent of the company’s revenue. The combination of Syntel’s clients and expertise will diversify Atos’s portfolio and help them grow. Last year, they lost the acquisition of digital security firm Gemalto to their French rival Thales, so this acquisition of Syntel is definitely a much-needed win for the company.
The US IT company has certainly improved over the past couple years – in 2016, Syntel had a net profit loss of $57 million, and in 2017, it posted a positive profit of $166 million. Over the past year, the company’s stock price has risen over 109 percent. Atos’s stock opened 3 percent higher than last week, but has shot down over the course of Monday, falling over 9 percent.
Although investors may be wary about the size of the deal, the acquisition will likely prove to benefit Atos in the long-run.
Featured image via Pixabay/wynpnt
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