Cap Gemini, a French information technology services company, said it will buy US-based rival iGate Corp for $4 billion in a deal that would make North America into its biggest market and hand iGate’s founders a $1 billion windfall.

Cap Gemini also raised its 2015 sales forecast yesterday (April 27) in a statement that was pushed up to coincide with the announcement of the deal. Its shares climbed nearly 8 percent, said a statement from the company.

iGate, which has strength in the financial services sector, has grown quickly since its 1996 stock market listing.

Cap Gemini said iGate has been recording double-digit growth and a 19 per cent operating margin. Its 2014 revenue was $1.3 billion.

The acquisition would significantly bolster the French company's presence in North America.

iGate does about 80 per cent of its business in North America, and would represent 30 per cent of the combined group's estimated 2015 revenue of €12.5 billion ($13.58 billion).

The deal would enhance earnings by 12 per cent in 2016 and 16 per cent in 2017, according to Cap Gemini. The combined group's operating margin would be above 10 per cent.

Cap Gemini, whose market capitalisation was about €13 billion ($14 billion) at the close of business on Friday, said it would pay $48 a share for iGate. The US company's shares added 3.5 per cent to $47.45 yesterday.

Cap Gemini will finance the deal partly through about $1 billion of its own cash, along with an equity portion that will not exceed a 6 per cent dilution of the French company's share capital. More than $2 billion would be financed through debt.

Cap Gemini said it had the backing of shareholders representing 54 per cent of iGate’s share capital.

Ashok Trivedi and Sunil Wadhwani, the Indian-American co-founders and co-chairmen of iGate, own 12.81 per cent and 12.99 per cent, respectively, of the shares and could collect more than $1 billion between them.

With the acquisition, Cap Gemini would add new clients such as General Electric and Royal Bank of Canada.

iGate employs 33,000 people globally, with 75 per cent of them in India. The combined company would have more than 100,000 employees there, or 48 per cent of its workforce.

In a separate statement, Cap Gemini said sales grew by 10.5 per cent in the first quarter and raised its 2015 growth target to at least 5 per cent from its previous forecast of between 3 per cent and 5 per cent.

The deal will require various regulatory approvals, and was expected to close in the second half of this year.

Bank of America Corp advised iGate while Lazard Limited advised Cap Gemini on the transaction. - Reuters