Whatever

15 September 2014 By Robert Cyran Follow @rob_cyran

Cognizant may have good reasons for buying healthcare IT provider TriZetto for $2.7 bln. But promises of revenue synergies mixed with jargon should provoke investor skepticism, not an immediate 2 pct pop in the buyer’s shares. It’s a symptom of simmering M&A exuberance.

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Cognizant Technology Solutions said on Sept. 15 that it had agreed to buy TriZetto for $2.7 billion in cash. The outsourcing and consulting firm is purchasing the healthcare IT provider from private equity group Apax Partners and minority stakeholders BlueCross BlueShield of Tennessee and Cambia Health Solutions.

Francisco D’Souza, Cognizant’s chief executive, said: “We are excited that the integrated portfolio of capabilities across technology and operations will uniquely position us to help clients drive higher levels of operational efficiency, while re-imagining care for the future. We look forward to welcoming the TriZetto team into the Cognizant family and creating a truly differentiated and sustainable foundation for healthcare.”

Cognizant said the deal offers $1.5 billion of potential revenue synergies, and will have a neutral to positive impact on the company’s long-term growth and margins.

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