A Brief Summary Accenture’s Recent Acquisitions

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Accenture (NYSE:ACN) is witnessing a strong growth in its revenues on the back of demand for its consulting services. The company continues to experience growing demand for digital-related services and assisting clients with the adoption of new technologies. Additionally, the company continues to witness a greater increase in systems integration consulting through the use of lower cost resources in its Global Delivery Network. This trend has resulted in work volume growing faster than revenue in Accenture’s systems integration business, and this trend to expected to continue.

In order to ensure that the company continues to grow its digital services, it has announced the acquisition of a host of companies over the past quarter. Some of the transactions have been concluded.  These acquisitions not only diversify Accenture’s geographical footprint but also builds its portfolio of services in the emerging Cloud, Internet-of-Things, Mobile computing and cyber security domains. In this note, we explore these acquisitions and how these will help Accenture’s businesses.

See our full analysis for Accenture

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Minority Stake In Octo Technology To Improve Footprint In France

On September 16th, Accenture announced that it has entered into a definitive agreement to acquire a 47.4% stake in OCTO Technology, a France-based IT consulting company specializing in digital transformation and software development. [1]

Accenture is acquiring shares of OCTO from OCTO CEO François Hisquin, other OCTO partners, and Financière Arbevel (a French financial institution) for €22.50 per share and €1.722 per equity warrant. Accenture is paying a 43.8% premium over OCTO Technology’s last closing share price. At the acquisition price, the deal is valued at €115m.

The transaction is expected to be completed in early 2017. The deal helps Accenture in expanding its digital services in France, while OCTO can leverage Accenture’s global scale and broad capabilities.

Improvement In Italian Footprint With New Energy Group Acquisition

On September 8th, Accenture announced that it has entered into an agreement to acquire New Energy Group, an Italy-based company specializing in Salesforce solutions. [2]  The acquisition will help Accenture to expand its cloud service  in the European region and affirm its leadership as a Salesforce solutions service provider.

Upon the completion of the acquisition of New Energy Group, Accenture will add to its global team 200 Salesforce certified professionals from Italy and Spain.

 Acquires Melbourne Oracle partner Redcore To Strengthen Its Business Down Under

On August 23rd, Accenture announced that it has acquired Melbourne-based IT consulting company that specializes in Oracle. Redcore not only adds a suite of services in cyber security (identity and access management services) to Accenture’s services, but also improves its cloud offering for Oracle in Australia. Terms of the acquisition were not disclosed.

 Tecnilógica Acquisition To Help Accenture With Its Digital Operations in Spain

Accenture announced on July 28th that it had acquired Tecnilógica, a Spanish company that employs the use of open source technologies to build innovative omni-channel experiences for smart connected devices (mobile, web, touchscreens, wearables and IoT-enabled devices). [3]

Tecnilógica has a proprietary digital content management and distribution architecture that enables a connected device to interact with its surroundings. This acquisition will help the company to improve its IT consulting services for the emerging Internet of Things (IoT), which is expected to be a trillion-dollar industry with the improvement in internet penetration.

MOBGEN Expanding End-to-End Digital Services

In July, Accenture announced that it had acquired MOBGEN, a Dutch company that provides solutions for improving the user experience, for both mobile devices and the Internet of Things (IoT). [4] Terms of the acquisition were not disclosed. Nevertheless, this acquisition not only improves Accenture’s footprint in Europe but also helps Accenture in building its portfolio for cloud-based mobile analytics services.

 Maglan Acquisition To Boost Security Services in Israel And Around The World

In June, Accenture announced that  it had acquired Maglan, a privately-held Israeli cyber security company specializing in offensive cyber simulation. [5]

Maglan will augment Accenture’s full range of security services and defensive countermeasures, comprising strategy and risk management through enterprise and extended enterprise security. Additionally, this acquisition will “form the core of a future Accenture Cyber Fusion Center in Israel and support Accenture around the globe”, according to the company.  With this acquisition, the company has acquired a total of the five investments in the cyber security space (FusionX, Cimation, minority investment in Team8 and Endgame Inc.) in the past several months.

According to Markets and Markets, cyber security market would grow from $106.32 Billion in 2015 to $170.21 Billion by 2020, at a Compound Annual Growth Rate (CAGR) of 9.8%. [6] It also expects North America to generate the highest revenue for the cyber security market during the entire forecast period, while significant revenue growth is expected from Latin American and Asia-Pacific regions.

Considering that some of the acquired companies have esteemed clientele among the Fortune 100 organizations in financial services, critical infrastructure, technology, government and manufacturing, Accenture is well positioned to augment its consulting revenues from cyber security services. This would help the company to shore up its consulting revenues.

At present, we have a $110.65 price estimate for Accenture, which is in line with its current market price.

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Notes:
  1. Accenture acquires French IT consultancy Octo for €115m, September 16 2016 []
  2. Accenture (ACN) to Acquire Salesforce Solutions Provider New Energy Group, September 8 2016 []
  3. Accenture Acquires Tecnilógica to Scale Its Open Source Digital Skills in Spain, July 28th 2016 []
  4. Accenture Acquires MOBGEN Expanding End-to-End Digital Services, July 19 2016 []
  5. Accenture Acquires Maglan, Expands Security Services in Israel, June 20 2016 []
  6. Cyber Security Market worth $170.21 Billion by 2020, June 2015 []