Cognizant to Acquire Belcan in $1.3B Deal to Boost R&D

IT services giant Cognizant on Monday announced it would acquire digital engineering firm Belcan for $1.3 billion to boost its engineering research and development footprint in several lucrative segments.

New Jersey-based Cognizant will greatly expand its presence in automotive, aerospace, and defense industries using Ohio-based Belcan’s existing relationships with General Motors, Boeing, NASA, and the US Navy and more, according to a press release. Cognizant will use a mix of cash and stock to buy Belcan, which has more than 10,000 employees spread across 60 locations.

Cognizant hopes the deal will expand its access to the $190 billion engineering, research and development (ER&D) market and complement its existing Internet of Things (IoT) and digital engineering practices. The company is looking to leverage Belcan’s skilled workforce of engineers and technicians to ramp up to $100 million per year in annual revenue within three years.

Saurabh Mehta, Cognizant’s global head of markets and manufacturing, tells InformationWeek in an interview that the deal gives the company new advantages in the North American and UK markets for engineering research and development and access to Belcan’s huge engineering talent pool.

“Belcan has a very unique asset base, which is engineering talent in the Americas and UK,” Mehta says. “That gives us a very unique opportunity because historically, we’ve not had that level of depth in talent in the Americas. So this gives us a very nice dimension.”

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ER&D Advantage

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

Kumar continued, “We see the opportunity to immediately accelerate revenue growth and create compelling shareholder value through our combined engineering capabilities. 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.”

Belcan CEO Lance Kwasniewski will stay on to lead the company, which will become an operating unit of Cognizant. The company says it will establish a “dedicated integration" program that will be focused on the transition.

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“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 in a statement.

The transaction is expected to close in September, subject to regulatory approvals.