Persistent Systems sees quite a bit of room to grow its business by taking Nagarro's capabilities to its own customers and vice versa. However, the company seems to be holding off on outlining a detailed plan until the acquisition closes and the two businesses can be brought together. So, what's holding it back?
CEO Sandeep Kalra said that there's a lot to be done but they'll have to just be patient for the closure. This was during Persistent Systems' Q2FY27 earnings call on Oct 15, responding to a question on the quick wins the company would target after acquiring the European digital engineering firm. The company has already signed a cooperation agreement that allows the two sides to explore opportunities before the transaction closes.
However, he did flag a limitation on how far the companies can plan their integration while remaining separate listed entities. "Since the deal is not yet closed, we are two public companies working independently. We have a limited ability to go in and build a synergy plan and so on," he said.
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Persistent has secured approximately 94.04% of Nagarro's share capital, excluding treasury shares, following the acceptance period for its takeover offer.
Kalra said that Persistent hoped to receive the outstanding approvals within four to six weeks, with eight weeks as the outer expectation. He added, however, that "these approvals have to come when they come".
The Immediate opportunity
Persistent is banking on the breadth of Nagarro's customer base and capabilities to create opportunities across the combined business. Kalra said discussions during due diligence and afterwards had given the company confidence in Nagarro's customer relationships and technical capabilities.
"There is the real estate of customers out there," he said, adding that the quality of Nagarro's customers was "impeccable".
He also highlighted Nagarro's capabilities in SAP (Systems, Applications, and Products) and its investments in AI consulting. Persistent hopes to leverage these alongside its own services to expand business with existing customers.
Persistent intends to squeeze out Nagarro's remaining minority shareholders after closing. Kalra said that, following this process, the company would need "about five to six months to optimistically bring the two companies together". Persistent has positioned the acquisition as a way to expand its industry capabilities, strengthen its European delivery presence and become a more comprehensive partner for large transformation programmes.
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