Cognizant Technology Solutions (NASDAQ: CTSH) struck a deal to buy Belcan, a Cincinnati-based firm that provides engineering services for the aerospace and defense industries. Belcan also ranks as the 10th-largest provider of engineering staffing in the US.
The deal calls for Cognizant to pay $1.29 billion, which includes $1.19 billion in cash and 1.47 million shares of stock. The deal is expected to close in the third quarter.
Cognizant aims to strengthen its engineering capabilities with the deal and become a leader in the aerospace and defense market.
“Belcan’s deep engineering capabilities and domain expertise across the aerospace and 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,” Cognizant CEO Ravi Kumar S said in a press release.
Belcan is expected to add more than $800 million in revenue on an annualized basis. Cognizant also noted that revenue from the business being acquired has grown at an 8% compound annual growth rate over the last two years.
Belcan supplies engineering research and development services. Its customer base includes aerospace, defense, space, marine and industrial firms, primarily in North America and the UK.
Workforce ecosystem services provided by Belcan include statement of work, VMS, MSP and RPO, according to the company’s website.
Cognizant noted:
- Commercial aerospace, defense and space companies comprise 76% of Belcan’s revenue.
- All top 10 aerospace and defense engineering research and development spenders are active clients.
- 27 of the Belcan’s top 30 clients are Global 2000 companies or the US federal government.
Belcan CEO Lance Kwasniewski is expected to continue to lead Belcan, which will operate under the Belcan name as a unit of Cognizant.
“Cognizant will better position our team to capitalize on compelling tailwinds, including increasing outsourced [engineering research and development] spend, the transformative impact of digital engineering adoption rates, robust commercial aerospace demand and favorable long-term defense and space spending,” Kwasniewski said.
Belcan has more than 6,500 engineers and technical consultants, 85% of whom are in North America. The remainder are in the UK, India, Poland and Mexico.
Belcan is a portfolio company of AE Industrial Partners, a private equity firm based in Boca Raton, Florida.