Persistent Systems makes its biggest bet yet with $1.3 billion Nagarro deal

Persistent Systems Ltd on Saturday announced its biggest acquisition since an IPO in 2010, aiming to become the country’s seventh-largest IT services company, surpassing Mphasis Ltd and Coforge Ltd.

Persistent Systems will pay 81 euros per share to acquire Nagarro SE for approximately $1.3 billion. The deal is expected to close in March 2027, after which the combined entity will operate as the Persistent-Nagarro Group.

Nagarro is a Munich-based IT services firm that closed the last fiscal year with $999 million in revenue and approximately 18,500 employees. According to Persistent, almost half of its revenue comes from European customers, which is a significant advantage of the deal.

“This combination strengthens our position in Europe, expands our scale in North America and enhances our ability to help our customers accelerate their AI and digital transformation journeys,” Sandeep Kalra, CEO, said in a statement to the stock exchanges.

After the acquisition, it expects one-fifth of its business to come from Europe, down from one-tenth currently.

Coforge, Mphasis and Persistent Systems finished last fiscal year with revenues of $1.87 billion, $1.8 billion and $1.65 billion, up 29%, 7% and 17%, respectively, on a year-over-year basis. While Indian IT services firms follow the April-March financial calendar, Nagarro follows the January-December financial calendar.

financing problem

India’s mid-sized IT services firms with revenues of $1-2 billion have made the two largest acquisitions in Indian IT in the last 12 months.

On December 26, Noida-based Coforge announced the acquisition of US-based data analytics firm Encora. This is the largest acquisition in the Indian IT space at $2.39 billion. The company aimed to generate approximately $2.5 billion in total revenue.

For now, Persistent Systems is expected to back up Coforge’s big bet with an acquisition of its own. The company plans to do this in two steps.

The Pune-based company has agreed to purchase 21% of the shares from Carl Georg Durschmidt, Nagarro’s largest shareholder and member of the supervisory board. This corresponds to approximately 273 million dollars. In order for the acquisition to be completed, Persistent must purchase at least 50% of the shares.

It is making a public offer to all other Nagarro shareholders to purchase its shares at 81 euros per share, with the aim of acquiring the entire company and delisting it from the German stock exchange.

Nagarro co-founder Manas Chandra Human owns 6.2%, while other company executives also own 6%, giving management a total ownership of about 12%. Persistent’s friendly offer of €81 per share will need the support of some big money managers and public investors who own the remaining 67% of the shares.

For now, the administration supports the proposal, Nagarro said in a press release. Still, Persistent needs approval from the German market regulator. The transactions are expected to be completed in late 2026 or early 2027.

Persistent Systems does not pay for the purchase out of its own pocket. In December 2025, the company formed a wholly owned German subsidiary, Galaxy German Holding SE, which will borrow up to €1.4 billion ($1.6 billion) from Barclays. That’s more than $1.3 billion from share buybacks.

The company will also be required to repay the entire loan amount within 18 months, according to the loan terms. Simply put, Persistent Systems will need an additional source of financing to pay off its debt to Barclays within 18 months.

For now, the company has not disclosed the source of financing required to repay the loan or the reasons behind taking out a loan larger than the total amount needed to pay Nagarro’s shareholders.

Mint‘s emails to Nagarro and Persistent Systems remained unanswered.

inorganic growth

“The difference amount can be used to pay off part of Nagarro’s debt, which means the company will assume some of its debts. Nagarro’s net debt is almost the same as the $300 million difference that has now arisen,” said Sushovon Nayak, chief IT analyst at Anand Rathi Institutional Equities.

“For a mid-sized IT outsourcing provider, the only way to build scale is through large acquisitions. Persistent also has greater exposure to the automotive sector in Europe, but the question is how they will repay the Barclays debt within 18 months,” Nayak added.

These acquisitions come at a time when the country’s largest IT services companies are doubling down on new growth avenues as the rise of automation tools and geopolitical tensions in West Asia threaten to eat away at their revenues.

India’s five largest firms spent nearly $5 billion on acquisitions in the last 18 months.