Cognizant has signed a definitive agreement to acquire Belcan LLC (“Belcan”), a portfolio company of AE Industrial Partners and a supplier of Engineering Research and development (ER&D) services.
The acquisition will significantly expand Cognizant’s ER&D capabilities, building upon the Company’s leadership in the Internet of Things (IoT) and Digital Engineering practice areas.
The purchase price is approximately $1.3 billion in cash and stock, subject to customary adjustments.
Combining with Belcan, Cognizant will also add scale and establish a leadership position in the high-growth aerospace & defense (A&D) industry with a blue-chip client base, deep domain expertise, and significant technological capabilities with over 6,500 engineers and technical consultants.
The revenue the acquired business will contribute to Cognizant in 2024 depends on the timing of the close but is expected to be over $800 million annually. Revenue from the acquired company has grown at an 8% compound annual growth rate (CAGR) over the last two years.
“We believe that acquiring Belcan will strengthen Cognizant’s position in the sizable and fast-growing ER&D services market,” said Cognizant CEO Ravi Kumar S. “Belcan’s deep engineering capabilities and domain expertise across the aerospace & defense market will be complemented by Cognizant’s scale and own multi-decade digital engineering expertise, providing Belcan’s blue-chip client roster access to our advanced AI, Cloud and Data technologies.”
As a result of this transaction, Cognizant expects to:
- Significantly expand its access to the ~$190 billion ER&D services market, which is expected to grow at an over 10% forward CAGR through 2026, complementing its existing IoT and Digital Engineering practice areas.
- Diversify into the fast-growing A&D, space, and marine sectors with a stable set of blue-chip clients.
- Add a highly skilled, technical, accredited workforce and an employer of choice in ER&D services.
- Create shareholder value through enhanced growth opportunities and expected EPS accretion in 2026; expected to be broadly neutral to EPS in 2025
- Deliver over $100 million in annual revenue synergies within three years, with additional cost synergies expected over time.
- Complement the highly talented and strong US/UK-based workforce of Belcan with the talent pool from Cognizant’s global delivery network to support global programs in the Belcan client base.
“We are excited about this unique combination and the value creation it will bring to our customers and the opportunities it will provide for our employees. Cognizant will better position our team to capitalize on compelling tailwinds, including increasing outsourced ER&D spend, the transformative impact of digital engineering adoption rates, robust commercial aerospace demand, and favorable long-term defense and space spending,” said Lance Kwasniewski, the CEO of Belcan.
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