TEANECK, N.J. (Diya TV) — Cognizant, based in Teaneck, New Jersey, has announced its acquisition of Belcan, LLC, a leading global supplier of Engineering Research & Development (ER&D) services. The deal, valued at $1.3 billion in cash and stock, aims to bolster Cognizant’s presence in the aerospace, defense, and industrial sectors.

Belcan, owned by AE Industrial Partners, delivers critical digital engineering services to long-standing clients across North America and the United Kingdom. Its expertise spans commercial aerospace, defense, space, marine, and industrial verticals. This acquisition is set to enhance Cognizant’s ER&D capabilities, particularly within its Internet of Things (IoT) and Digital Engineering practice areas.

Cognizant CEO Ravi Kumar expressed enthusiasm about the acquisition, highlighting Belcan’s robust engineering capabilities and extensive domain expertise in the aerospace and defense markets. “Belcan’s deep engineering capabilities and domain expertise will be complemented by Cognizant’s scale and our multi-decade digital engineering expertise,” Kumar stated. He emphasized that Belcan’s clients will now have access to Cognizant’s advanced AI, Cloud, and Data technologies, creating opportunities for accelerated revenue growth and enhanced shareholder value.

Belcan’s CEO, Lance Kwasniewski, will continue to lead the company, which will operate under its own name as a unit of Cognizant. Kwasniewski is optimistic about the merger, stating, “We are excited about this unique combination and the value creation it will bring to our customers, along with the opportunities it will provide for our employees.”

This acquisition will significantly expand Cognizant’s access to the $190 billion ER&D services market, which is projected to grow at over 10% CAGR through 2026. The deal is expected to bring in over $800 million in annualized revenue in 2024, depending on the closing timing. The integration will also deliver more than $100 million in annual revenue synergies within three years, with additional cost synergies anticipated over time.

Cognizant’s strategic acquisition follows similar moves by other industry giants. For instance, French IT firm Capgemini expanded its ER&D capabilities by acquiring Altran for $4 billion in 2020. Cognizant’s swift M&A activity aims to widen the competitive gap with rivals like Infosys and position itself as a leader in the high-growth aerospace and defense industry.

Belcan’s diverse client base includes notable names such as Boeing, General Motors, Rolls-Royce, NASA, and the U.S. Navy. The integration of Belcan’s 10,000 employees across 60 global locations will complement Cognizant’s existing workforce and capabilities, enhancing its ability to support large-scale, complex engineering projects.

Financial advisors for the deal included Perella Weinberg Partners for Cognizant and Jefferies and Solomon Partners for Belcan. Legal advisors were Arnold & Porter for Cognizant and Kirkland & Ellis for Belcan.

The transaction, subject to regulatory approvals and customary closing conditions, is expected to finalize by the end of September 2024. The total purchase price includes $1.19 billion in cash and 1.47 million Cognizant shares, valued at approximately $97 million.