Cegeka to acquire CTG for $107m to boost North America and Europe offering

The acquisition has been agreed at $10.50 per share

European IT solutions provider Cegeka is acquiring digital transformation provider CTG for $107m (£84.5m).

Cegeka said that CTG's services complement its customer and service portfolio and strengthens its capabilities and knowledge.

The European provider hopes the acquisition will help deliver "enhanced value to customers across North America and Europe."

Cegeka will acquire CTG for $10.50 per share in cash.

The acquisition is expected to bring Cegeka to an annual turnover of €1.4bn (£1.2bn) in 2024, employing over 9,000 people in 18 countries.

The offer price represents a 44.8 per cent premium to the trailing 90-day volume weighted average stock price as of August 7, 2023.

Both the Cegeka and CTG board of directors unanimously approved the merger agreement.

CTG is a provider of digital transformation solutions with a strong client base across vertical markets such as healthcare, finance, energy, manufacturing, and government.

In 2022, CTG reported $325m (£256.7m) in revenue and $306m (£241.7m) in trailing 12-month revenue as of June 30, 2023.

Since 2018, CTG transformed into a provider of recurring and higher margin solutions work, which has expanded its gross margin from 19.1 per cent in 2018 to 28.1 per cent as of June 30, 2023.

"This merger is a logical next step in the continuous growth journey of Cegeka," said Stijn Bijnens, CEO of Cegeka.

"In CTG, we find a partner that complements our customer and service portfolio and strengthens our capabilities and knowledge."

Filip Gydé, CTG president and CEO added: "We are excited to enter into this transaction with Cegeka, which is a testament to the significant efforts we have undertaken to drive our transformation strategy to make CTG a pure-play digital IT solutions provider.

"At CTG, our mission is to drive better, faster results for our customers with high-value digital transformation solutions.

"In Cegeka, we are pleased to have found a partner that will enable us to accelerate this important work."

Last September, CTG acquired Eleviant Tech, a digital transformation company with expertise in mobile, cloud, web, blockchain, robotic process automation (RPA), and artificial intelligence (AI) technologies.

The acquisition added approximately $10m (£7.9m) in annualised revenue.