Persistent Systems is acquiring Nagarro for €1.27 billion and has secured a new deal worth over $650 million. This aims to significantly expand its global scale and AI capabilities.
Persistent Systems Eyes Global Expansion with Nagarro Acquisition and Major Deal
Persistent Systems has announced a transformative move to acquire 100% of Nagarro for an Enterprise Value of €1.27 billion. The offer price is €81 per share. This acquisition is set to significantly scale the combined entity, projected to have over $2.9 billion in revenue.
Reader Takeaway: Acquisition provides scale and new capabilities; new deal offers revenue visibility.
What just happened
Persistent Systems has entered a business combination agreement to acquire Nagarro. The deal values Nagarro at €1.27 billion and is funded by a €1.4 billion bridge facility from Barclays. Persistent has already secured an initial 21% stake. Alongside this, the company announced a new long-term contract with a US-based technology leader, expected to generate over $125 million annually with a total contract value (TCV) exceeding $650 million over 6.5 years.
Why this matters
The Nagarro acquisition is positioned as an expansion play, adding capabilities in SAP implementation and AI engineering. It significantly diversizes Persistent's geographic footprint, increasing its European presence to approximately 22% of combined revenue and entering markets like the Middle East and Japan. The combined entity will have over 46,000 employees across 40 countries.
The new deal is expected to be accretive to revenue and margins from Q2 and adds substantial revenue visibility.
The backstory
Persistent Systems has been focused on digital engineering and AI-led solutions. This acquisition marks a significant step-up in its scale and market reach, particularly in Europe. The company has reported strong growth, with FY26 revenue projected at $1.654 billion and a 5-year CAGR of 23.9%.
What changes now
Persistent aims to run Nagarro alongside its existing business initially, with a gradual integration plan to maintain continuity. The acquisition is expected to be cash EPS accretive and reported EPS accretive in Year 1, excluding transaction expenses. The company targets reducing its projected net debt/combined EBITDA leverage of 1.9x to 2.5x down to 1x by FY2030.
Risks to watch
Key risks include the substantial debt load from the bridge financing and the complexity of integrating Nagarro. Investors will also need to monitor regulatory approvals, particularly in Germany (BaFin) and India. Management addressed concerns about historical accounting issues at Nagarro, stating they are related to a past carve-out and not current operations.
Peer comparison
(No direct peer comparison information is available in the provided filing text.)
Context metrics (time-bound)
- Nagarro Acquisition EV: €1.27 Billion
- Nagarro Offer Price: €81 per share
- New Deal TCV: >$650 Million
- New Deal Annual Revenue: >$125 Million
- Combined Entity Revenue: >$2.9 Billion
- Persistent FY26 Revenue: $1.654 Billion
- Persistent Revenue Run Rate: >$1.7 Billion
- Persistent 5-Year CAGR: 23.9%
- Persistent EBITDA Margin: 15.6%
- Persistent PAT Margin: 12.6%
- Nagarro EBIT Margin: 13.9% (clarified by management)
- Projected Net Debt/Combined EBITDA Leverage: 1.9x to 2.5x
- Debt Reduction Target: 1x by FY2030
What to track next
Investors should monitor the progress of regulatory approvals, the successful integration of Nagarro, and Persistent's ability to manage its debt levels while growing the business. The company's performance in maintaining and improving margins will also be crucial.