Cognizant to acquire Belcan in $1.3bn deal to enhance engineering and digital services

Cognizant Technology Solutions Corp. (NASDAQ: CTSH) has signed a definitive agreement to acquire Belcan, LLC, a leading provider of Engineering Research & Development (ER&D) services, from AE Industrial Partners. The transaction, valued at approximately $1.3 billion, comprising both cash and stock, marks a significant expansion of Cognizant’s capabilities in the engineering domain, particularly within the aerospace and defense sectors.

Strategic Expansion in ER&D

The acquisition of Belcan, headquartered in Cincinnati, Ohio, greatly enhances Cognizant’s footprint in the ER&D sector, a market with substantial growth potential. Belcan’s established expertise in commercial aerospace, defense, space, marine, and industrial verticals across North America and the United Kingdom will be instrumental in expanding Cognizant’s service offerings in these areas. The transaction is set to close in the quarter ending September 30, 2024, subject to regulatory approvals and customary closing conditions.

Cognizant to acquire Belcan for $1.3 billion, for enhancing its ER&D capabilities and expanding its leadership in the aerospace and defense sectors.

Financial and Operational Synergies

The integration of Belcan will add significant value to Cognizant’s operations, with the acquired business expected to contribute over $800 million in annualized revenue. This reflects an 8% compound annual growth rate (CAGR) over the last two years. Ravi Kumar S., CEO of Cognizant, highlighted the strategic fit, stating, “Acquiring Belcan will strengthen Cognizant’s position in the sizable and fast-growing ER&D services market. 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.”

Leadership and Integration

Post-acquisition, Belcan will operate under its existing name as an operating unit of Cognizant, with Lance Kwasniewski, CEO of Belcan, continuing to lead the unit. This strategic decision is aimed at maintaining continuity and leveraging Belcan’s strong brand and client relationships in the ER&D services sector.

This acquisition is poised to significantly bolster Cognizant’s capabilities in the high-value ER&D sector, particularly in the aerospace & defense industries. By integrating Belcan’s technical expertise and client base with Cognizant’s global resources and digital capabilities, Cognizant is well-positioned to capture a larger share of the growing ER&D market, which is projected to expand at a forward CAGR of over 10% through 2026.