Global IT services provider, Accenture plc ACN recently announced a definitive agreement to acquire a 47.4% stake in OCTO Technology. The move is part of Accenture's efforts to enhance its digital marketing capabilities in France.
OCTO Technology is a technology consultancy focusing on digital transformation and software development. The company employs more than 320 people in five countries namely France, Brazil, Switzerland, Morocco, and Australia.
Impact of the Acquisition
Per the agreement, “Accenture will purchase the shareholding in OCTO from François Hisquin, founder and CEO of OCTO, other OCTO partners and Financière Arbevel at a price of €22.50 per share and €1.7222 per equity warrant.” Following the completion of the tender offer, Accenture will acquire all remaining OCTO shares and equity warrants at an all-cash tender offer price.
The offer price of €22.50 per share represents roughly 43.8% premium over OCTO’s closing stock price on Sep 14, 2016. This also represents roughly 76.2% premium of OCTO’s weighted average share price during the last twelve months.
The deal has been approved by the board of directors of both companies and is expected to close in the first quarter of 2017. The tender offer is subject to various customary closing conditions.
Post-acquisition, OCTO will join Accenture Digital. The acquisition will help Accenture’s clients gain access to a greater number of professionals specializing in digital e-commerce solutions.
Accenture’s OCTO acquisition underscores its expansion efforts in France. OCTO’s capabilities will complement Accenture Digital’s end-to-end services in this region and will help it to penetrate the market.
We are encouraged by Accenture’s strategy of growing through acquisitions. These buyouts have enabled the company to foray into newer markets, diversify and broaden its product portfolio, and maintain a leading position. We believe that regular acquisitions will significantly contribute to the company's revenue stream. This will also enable the company in effectively competing with other digital marketing service providers such as International Business machines Corp. IBM, Dell and Deloitte.
However, increasing competition from Cognizant Technology Solutions CTSH, a strained spending environment and Accenture’s broad European exposure may temper its growth to some extent.
Currently, Accenture has a Zacks Rank #4 (Sell).
A better-ranked stock in the technology sector is Cirrus Logic Inc. CRUS, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.