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news.Cognizant has signed a definitive agreement to acquire US-based healthcare IT software and solutions provider TriZetto for $2.7bn in cash.
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With aim to finance the transaction through a combination of cash on hand and debt, Cognizant has already secured $1bn of committed financing in support of the transaction, which will see TriZetto and its 3,700 employees joining Cognizant’s existing healthcare business.
TriZetto brings to Cognizant expertise and intellectual property, including multiple industry-leading software platforms used by payers and providers and approximately $1.5bn of potential revenue synergies cumulatively over the next five years.
The acquisition is expected to significantly accelerate Cognizant’s market position and strategy of delivering innovative healthcare software and solutions to a wide range of healthcare clients.
Cognizant chief executive officer Francisco D’Souza said: "Healthcare is undergoing structural shifts due to reform, cost pressure and shifting responsibilities between payers and providers.
"This creates a significant growth opportunity, which TriZetto will help us capture."
The transaction is expected to complete during the fourth quarter of 2014. Healthcare currently represents approximately 26% of Cognizant’s revenue.
Cognizant was advised by Credit Suisse, UBS Securities and Centerview Partners while Latham & Watkins and Nishith Desai Associates served as legal counsel.
TriZetto was advised by JP Morgan Securities and Goldman, Sachs & Co. and received legal counsel from Kirkland & Ellis.