IT services and consulting giant Cognizant has announced it has signed a definitive agreement to acquire Belcan, a global supplier of engineering research and development (ER&D), for $1.29 billion.
Founded in 1958, Belcan specializes in providing mission critical digital engineering services to organizations across commercial aerospace, defense, space, marine, and industrial verticals.
The Cincinnati-headquartered firm operates primarily in North America and the UK and has a staff count of more than 10,000 employees across 50 locations around the world.
Cognizant said Belcan will ramp up its ER&D capabilities and significantly expand its access to the rapidly growing $190 billion ER&D services market, which is expected to grow at an over 10% CAGR over the next two years.
The company is also aiming to establish itself as a leader in the high-growth aerospace and defense (A&D) industry by leveraging Belcan’s blue chip client base, domain expertise, and the technological capabilities of more than 6,500 engineers and consultants.
“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, said in an announcement.
In 2024, Cognizant estimates that Belcan, which has seen an 8% CAGR over the last two years, will add more than $800 million on an annualized basis, dependent on the date of the acquisition’s closure. It also expects the move to deliver over $100 million in annual revenue synergies within three years, with additional cost synergies to emerge over time.
“We see the opportunity to immediately accelerate revenue growth and create compelling shareholder value through our combined engineering capabilities,” Kumar added.
“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.”
Upon completion of the acquisition, the company will continue to operate under the Belcan name, with CEO Lance Kwasniewski expected to continue to lead the business. Cognizant said it will implement a dedicated integration program office to guide the process.
Commenting on the buyout, Kwasniewski said the companies’ combined expertise will bring further value creation to customers as well as new opportunities for 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,” he 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.”
The acquisition is expected to close in the quarter ending September 30, 2024, subject to regulatory approvals and closing conditions.
