Cognizant to Pay $1.3 Billion in Belcan Acquisition

IT consultancy and reseller Cognizant signaled its high priority for engineering services by announcing its intent to acquire Belcan.

New Jersey-based Cognizant is buying Belcan from private equity investor AE Industrial Partners for about $1.3 billion in stock and cash. The deal, which reportedly would add $800 million in annualized revenue, would close in the third quarter of 2024.

Belcan will keep its name and function as a Cognizant operating unit.

Both companies say engineering resource and development (ER&D) market is hot right now. Cognizant in its announcement estimated the ER&D services market at $190 billion currently, with a compounded annual growth rate (CAGR) of 10%.

Cognizant in a news release said adding Belcan will improve its existing Internet of Things (IoT) and digital engineering practices. But perhaps more importantly, Cognizant is expanding its vertical expertise into aerospace and defense and adding Belcan's "blue-chip client base."

Cognizant's Ravi Kumar

Cognizant, on the other hand, can offer IT solutions around AI, cloud and data to Belcan's customers, Cognizant CEO Ravi Kumar said. Google Cloud recently recognized Cognizant for its work in data analytics, and Microsoft recognized it for intelligent automation.

"We see the opportunity to immediately accelerate revenue growth and create compelling shareholder value through our combined engineering capabilities," Kumar said. "Belcan's clients would gain access to Cognizant's full suite of technology services, while Cognizant's clients across the manufacturing, automotive, energy, and high-tech sectors we believe will benefit from Belcan's engineering skills."

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The combined company would employ more than 6,500 engineers and technical consultants, Cognizant said.

Cognizant in late 2023 bought ServiceNow partner Thirdera.

Belcan Acquisition History

Cincinnati, Ohio-based Belcan launched in 1958 and won key contracts over the years with Procter & Gamble and General Electric.

Aerospace and industrial vertical-focused AE bought Belcan in 2015 for an undisclosed sum. The PE firm went on to tuck in 17 acquisitions into Belcan, including software engineering company Avista and workforce management solutions provider RTM Consulting.

Belcan CEO Lance Kwasniewski will continue to lead Belcan as a Cognizant operating unit.

"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. 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," Kwasniewski said. "Belcan's experienced team has built a growth-oriented business delivering highly complex, mission-critical, scalable services to our long-standing customer base. I look forward to continuing to lead our team as we unite and leverage Belcan's and Cognizant's comprehensive services and cross-industry clientele to execute on our collective strategy, ultimately earning the role of our clients' most trusted partner in intelligent engineering."

Cognizant drove $19.4 billion in fiscal year 2023 revenue.