Persistent Systems Share Plummets 10%, Tests 52-Week Low on Nagarro Buyout, $650-mn US Deal

Mumbai, June 29: Shares of Persistent Systems (NSE: PERSISTENT) plummeted up to 10% intraday Monday and were trading down Rs 484.00 or 10.00% at Rs 4,357.50 on opening bell in Mumbai Monday on significant sell-side volume, heading towards a fresh 52-week low of Rs 4,362.00 so far, as dealers react to news over the weekend that Persistent Systems agreed to acquire Germany-based digital engineering company Nagarro SE, and would also be providing services worth more than $650 million over six years to an unnamed United States-based global technology company. 

Persistent Systems opened at Rs 4,500.00, traded as high as Rs 4,512.00 early Monday, but steadily declined through trade to hit an intraday low of Rs 4,362.00. Check out the intraday chart below. 

Persistent Systems Order Book 

Monday’s volume-heavy decline has made for a decidedly one-sided order book on Persistent Systems Monday, with sell-side orders comprising 90.02% of all orders or 3,45,557 shares, while buy-side volume trails far behind at 9.98% or 38,300 shares. The bid price is set between Rs 4,359.00 and Rs 4,361.00, while the ask comes in between Rs 4,362.50 and Rs 4,364.50. 

Persistent Systems Weekly Chart 

Persistent Systems started off strong earlier in the week, climbing from Rs 4,848.05 on June 22, to top out at around Rs 4,908 on June 24, before reversing course into Friday’s close of Rs 4,841.50. 

On Monday however, Persistent Systems has given up all of its gain for the week and erased more than 10%, plummeting through its prior week’s price range and into new 52-week-low territory at Rs 4,362.00. The downturn suggests that market participants were either unaware or unprepared for Persistent’s weekend announcements.

Persistent Agrees to Buy Nagarro Out 0f Germany 

Over the weekend, Persistent announced it has entered into an agreement to acquire Nagarro SE, a digital engineering solutions provider based in Munich, Germany, through its wholly owned subsidiary Galaxy Germany Holding SE. Persistent will offer EUR 81 per Nagarro share in an all cash voluntary public open offer. 

The offer price is 140% premium to Nagarro’s last undisturbed closing price on June 25 on the Frankfurt Stock Exchange, and represents a 94% premium to its volume weighted average price over the past 3 months. Persistent has entered into a Share Purchase Agreement with Nagarro’s largest shareholder Lantano Beteiligungen GmbH for purchase of about 21% of Nagarro’s shares. In addition, Nagarro’s management and supervisory boards have both recommended that Nagarro shareholders accept the offer. 

Financing for the acquisition has been committed to by Barclays and the acquisition is subject to Nagarro shareholders accepting at least 50% plus one share of Nagarro’s shares. It is also subject to clearance from Germany’s financial markets regulator BaFin and other regulatory approvals. Persistent expects the acquisition to close in Q4 CY20 26 or Q1 CY20 27. 

With the acquisition of Nagarro, Persistent expects to provide combined annual revenues of about $2.9 billion and have more than 46,000 employees working across more than 40 countries. Together, Persistent-Nagarro will be the second largest digital engineering company in the world by revenue. The combined entity will also be India’s seventh largest technology services company by revenues. 

Persistent’s Europe revenues will more than double from ~9% to ~22% of the combined group’s total revenues. Additionally, Persistent will add SAP and customer experience capabilities, and gain greater exposure in the manufacturing, retail, and public services industries verticals. 

Persistent Announces Strategic Outsourcing Deal with U.S.-Based Global Technology Firm 

Separately on Saturday, Persistent also announced the signing of a six-and-a-half-year strategic services agreement with an unnamed U.S.-based global technology company worth over $650 million. The total contract value is expected to be over $125 million per year. 

Services provided under the agreement will include product development, cloud services delivery operations, and support across a range of enterprise software products. Persistent confirmed that the agreement is not considered a related party transaction. 

“The scope of work under this agreement is governed by the strategic priorities of our client and falls well within our normal course of business,” Persistent said in a statement. 

Source

• https://www.nseindia.com/get-quote/equity/PERSISTENT/Persistent-Systems-Limited