Mergers and Acquisitions

Cognizant Acquires IT Services Firm Frontica

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Cognizant Technology Solutions (CTSH) has acquired Frontica Business Solutions AS from Akastor. The deal, valued at about $128 million, arrives at an awkward moment for Cognizant, which is conducting an internal corruption investigation that's unrelated to the Frontica buyout.

Frontica, based in Norway, specializes in IT outsourcing and Business Process Outsourcing within the oil and gas industry. The company's services include SAP consulting, payroll solutions and other IT consultancy services for the energy vertical. Frontica's staffing business, Frontica Advantage, is not a part of the deal and remains an Akastor portfolio company.  The deal, which is subject to regulatory approval, is expected to close in Q4 2016.

Generally speaking, IT services provider valuations in the energy sector have declined in recent quarters amid depressed energy prices. MSPs like RigNet, for instance, are striving to diversify beyond the oil and gas sector to offset declining profits and restore growth.

Cognizant's stock, meanwhile, was rocked last week amid an internal corruption probe at the IT services provider. President Gordon Coburn resigned as part of the investigation. Cognizant declined to predict if or how the probe will impact the company's revenues and profits.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.