Cognizant to acquire Belcan for $1.3B

Cognizant is acquiring Belcan LLC, a portfolio company of AE Industrial Partners and a global supplier of engineering research & development (ER&D) services, at a purchase price of approximately $1.3 billion in cash and stock, subject to customary adjustments.

Belcan is an established player in ER&D providing mission-critical digital engineering services for a long-standing customer base across the commercial aerospace, defense, space, marine and industrial verticals, primarily in North America and the United Kingdom (UK).

The acquisition will significantly expand Cognizant’s ER&D capabilities, building upon the company’s leadership in the Internet of Things (IoT) and digital engineering practice areas. Combining with Belcan will also add scale and enable Cognizant to establish a leadership position in the high-growth aerospace & defense (A&D) industry with a blue-chip client base, deep domain expertise, and significant technological capabilities with more than 6,500 engineers and technical consultants.

The revenue the acquired business will contribute to Cognizant in 2024 is expected to be more than $800 million on an annualized basis. Revenue from the acquired business has grown at an 8% compound annual growth rate (CAGR) during the past two years.

“We believe that acquiring Belcan will strengthen Cognizant’s position in the sizable and fast-growing ER&D services market,” said Cognizant CEO Ravi Kumar S. “Belcan’s deep engineering capabilities and domain expertise across the aerospace & 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. 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.”

As a result of this transaction, Cognizant expects to significantly expand its access to the ~$190 billion ER&D services market, which is expected to grow at more than 10% CAGR through 2026.

Lance Kwasniewski, Belcan CEO, is expected to continue to lead Belcan, which will continue to operate under the Belcan name as an operating unit of Cognizant. Cognizant will also establish a dedicated integration program office to drive execution against strategic and financial goals for the transaction.

“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.”

The transaction is anticipated to close in Q3 2024, subject to the receipt of required regulatory approvals and other closing conditions. The total purchase price of approximately $1.29 billion, comprises $1.19 billion in cash consideration and a fixed 1.47 million Cognizant shares, with a current value of $97 million. The cash consideration is expected to be funded through a mix of cash on hand and debt.

Cognizant helps clients modernize technology, reimagine processes, and transform experiences so they can stay ahead in a fast-changing world.

Founded in 1958, Belcan is a global supplier of design, software, manufacturing, supply chain, information technology, and digital engineering services to the aerospace, defense, space, marine, government services, automotive, and industrial markets. Belcan engineers better outcomes for customers – from jet engines, airframe, and avionics to heavy vehicles, automobiles, and cybersecurity.