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COGNIZANT TECHNOLOGY SOLUTIONS CORP 8-K Report, Material Agreement (Jun 10, 2024)

Filed June 10, 2024For Securities:CTSH

Summary

Cognizant Technology Solutions Corporation (CTSH) announced a significant strategic acquisition through its wholly-owned subsidiary, Cognizant Domestic Holdings Corporation. On June 5, 2024, the company entered into an Agreement and Plan of Merger to acquire 100% of the equity of Propulsion Holdings, LLC, the indirect parent of Belcan, LLC, for an aggregate purchase price of approximately $1.29 billion. This consideration comprises $1.19 billion in cash and 1,470,589 shares of Cognizant's Class A Common Stock, subject to customary adjustments. The acquisition is expected to bolster Cognizant's capabilities, particularly in the Engineering Research & Development (ER&D) services market and the Aerospace & Defense sector, aligning with its growth strategies.

Key Highlights

  • 1Cognizant to acquire Belcan, LLC (via Propulsion Holdings, LLC) for approximately $1.29 billion.
  • 2Transaction involves $1.19 billion in cash and 1,470,589 shares of CTSH Class A Common Stock.
  • 3Acquisition aims to strengthen Cognizant's ER&D services and Aerospace & Defense sector presence.
  • 4Expected closing in the quarter ending September 30, 2024, subject to regulatory approvals (including HSR and UK NSI Act).
  • 5Transaction is not subject to a financing condition.
  • 6Customary representations, warranties, and covenants are included in the Merger Agreement.
  • 7Cognizant has secured buy-side representations and warranties insurance policies to mitigate potential losses.

Frequently Asked Questions

The acquisition of Belcan, LLC is expected to significantly enhance Cognizant's capabilities in the Engineering Research & Development (ER&D) services market and the Aerospace & Defense sector. This aligns with Cognizant's strategy to expand its offerings and capture growth opportunities in these specialized areas.

The aggregate purchase price is approximately $1.29 billion, consisting of $1.19 billion in cash and 1,470,589 shares of Cognizant's Class A Common Stock. The cash portion is expected to be funded through a combination of existing cash on hand and debt.

The transaction is anticipated to close in the quarter ending September 30, 2024. However, the closing is contingent upon meeting certain conditions, including the receipt of required regulatory approvals, such as the expiration of the Hart-Scott-Rodino waiting period and approval under the UK National Security and Investment Act 2021.

Yes, several closing conditions must be met. These include obtaining necessary regulatory approvals, the absence of any prohibitive laws or orders, certain third-party consents, accuracy of representations and warranties, performance of covenants, absence of material adverse changes, and satisfactory resolution of any pending legal proceedings that could prohibit the transaction. The deal is not subject to a financing condition.