Summary :
Persistent Systems shares fell over 10% after announcing its planned acquisition of Germany's Nagarro at €81 per share, raising investor concerns over the deal's high valuation and execution risks. Despite management calling the acquisition transformational, the market reacted cautiously to the large cross-border transaction. The merger is expected to create a $2.9 billion digital engineering company with a stronger AI and European presence.
Stocks of Persistent Systems Ltd. tumbled as much as 10% on Monday, June 29, marking their sharpest intra-day fall since April 2025, following the announcement of the company's planned acquisition of digital engineering firm Nagarro SE based out of Germany. The steep slide came amid fears of the execution risks and valuation of the huge cross-border deal despite the firm calling it "transformational" for its growth strategy.
The stock was last seen trading at ₹4,337, down 10.46%.
Persistent to Acquire Nagarro at €81 Per Share
Persistent Systems has signed a Business Combination Agreement with Munich-headquartered Nagarro and announced a voluntary public takeover offer for all outstanding Nagarro shares at €81 per share in cash. The offer represents a premium of approximately 140% over Nagarro's undisturbed closing price on June 25, 2026, and around 94% over its three-month volume-weighted average price.
The company has already secured an approximately 21% stake in Nagarro through a binding agreement with its largest shareholder, Lantano Beteiligungen GmbH. Members of Nagarro's Management Board have also expressed their intention to tender their shares into the offer. The transaction requires shareholder acceptance of at least 50% plus one share and remains subject to approvals from German and Indian regulators. The acquisition is expected to close in Q4 CY26 or Q1 CY27.
Combined Entity to Become Global AI Engineering Leader
With the merger complete, the merged Persistent-Nagarro group is expected to earn revenues of about $2.9 billion per year and employ over 46,000 professionals in over 40 countries around the globe. This would make it the second-largest digital engineering company in the world in terms of revenues and seventh largest technology service provider in India.
Currently, Persistent is employing over 27,500 employees across 21 countries, whereas Nagarro employs over 18,500 professionals across over 40 countries and earned revenue of about €1 billion in CY25.
In terms of customer base, the merged company will be catering to over 350 key customers, including four out of the top five automotive OEMs of Europe, seven out of the top 10 US and Indian banks and eight out of the top 15 healthcare and life science firms of the world. In geographical distribution terms, it will be earning in excess of $1.7 billion from North America and over $600 million from Europe, raising Persistent's revenue contribution from Europe from 9% to 22%.
Financial Impact and Strategic Benefits
Persistent anticipates that the deal will result in positive earnings per share in the very first year of operation. Based on a simplified pro-forma trailing 12-month performance, the merged entity will generate revenues of $2.795 billion, with EBITDA being $463 million, EBIT being $337 million, and post-tax profits being $215 million.
Estimated EPS will be around $1.36 (₹127), up from $1.30 (₹121) seen in Persistent on a standalone basis. The company made it clear that the data above is merely illustrative and can’t be used as management guidance.
The management sees significant enhancement of Persistent’s capabilities in artificial intelligence, ERP and customer experience, European footprint expansion, broader industry verticals coverage, and a platform which would take years to build through organic growth. The merger will be funded using committed financing from Barclays. The management also expects leverage to stay at conservative levels and go down materially during the next two years.
Strong Financial Performance Before the Deal
The fourth quarter of FY26 saw Persistent Systems performing well on the operations front. The consolidated net profit was up by 20.43% on a sequential basis to ₹529.26 crore, whereas revenue went up by 7.35% to ₹4,055.94 crore compared to ₹439.45 crore in Q3 FY26.
Year-over-year, net profit jumped 33.73%, whereas revenue increased by 25.10%.
