Cognizant to buy TriZetto for $2.7 billion to boost healthcare business
In the largest acquisition by an India-centric IT services company, Cognizant Technology Solutions is set to buy US-based TriZetto for $2.7 billion ( Rs 16,500 crore) from private equity firm Apax Partners in an all-cash deal.business Updated: Sep 15, 2014 23:52 IST
In the largest acquisition by an India-centric IT services company, Cognizant Technology Solutions is set to buy US-based TriZetto for $2.7 billion ( Rs 16,500 crore) from private equity firm Apax Partners in an all-cash deal.
The deal announced on Monday will help the company tap lucrative US opportunities in IT for healthcare and edge closer to category leader Tata Consultancy Services in terms of revenue.
The deal puts the spotlight on its 46-year-old co-founder and CEO Francisco D’Souza, Nairobi-born son of an Indian diplomat.
“Healthcare is undergoing structural shifts due to reform, cost pressure and shifting responsibilities between payers and providers. This creates a growth opportunity, which TriZetto will help us capture,” he said.
Though Nasdaq-listed $8.84-billion Cognizant has long since moved its headquarters from Chennai to New Jersey in the US, two-thirds of its 187,000 workforce and over half of its 75 delivery centres are in India and most of its leadership is of Indian origin.
Cognizant hopes this deal would help it gain advantage over its peers TCS, Infosys, Wipro and HCL for large outsourcing contracts from pharma, hospital and health insurance firms in the US.
The companies are under pressure to improve efficiencies in the light of the US president’s “Obamacare” law.
The combined healthcare unit will serve 245,000 healthcare providers and involve $3 billion ( Rs 18,000 crore) in combined revenue.
“It is a strong strategic move by Cognizant, enabling the company to expand its reach as it has identified a partner which has extensive penetration in the healthcare provider ecosystem,” said Nishchal Khorana, industry expert at consulting firm Frost & Sullivan.
Cognizant pipped Infosys to the No.2 position with a turnover of $ 8.84 billion in 2013. TCS, at $13.4 billion, is way ahead.