Akastor, an oil service investment company, has entered into a definitive agreement to sell Frontica to Cognizant for a consideration of NOK 1,025 million on a debt-and-cash-free basis.
Frontica is comprised of the ITO and BPO business segments of the Frontica Group, and excludes Frontica’s staffing business, Frontica Advantage.
“Frontica has undergone an impressive organizational development and will now benefit further from Cognizant’s scale, market position and technology infrastructure,” says Kristian Røkke, CEO of Akastor. “This transaction makes strategic sense for all parties and we are pleased with the value created for Akastor’s shareholders.”
Frontica has focused its business within ITO and BPO on SAP consulting, payroll solutions and other IT consultancy services relevant for the oil and gas industry. The company had a total order backlog of NOK 5.1 billion at the end of the second quarter 2016.
“I am proud of what Frontica has accomplished in recent years and am confident in the company’s position for future growth,” says Niels Didrich Buch, Frontica CEO. “Cognizant has an impressive track record and we are looking forward to becoming a part of their global platform to the benefit of our existing customers, also enabling expansion of our business.”
“We look forward to welcoming Frontica’s talented employees into the Cognizant family once the acquisition is closed. Together, we will create even greater value for our clients in the Nordics and other geographies,” said Santosh Thomas, president, Global Growth Markets, Cognizant.
“The acquisition helps us strengthen our oil and gas industry expertise, expand our presence in key
markets, and deepen and broaden our service portfolio for our clients. Frontica will play a key role in helping us realize these benefits through their specialized capabilities in serving the oil and gas industry.”
The sale will generate an accounting gain of approximately NOK 500 million to Akastor to be recognized in the fourth quarter results. The purchase price will be adjusted for actual net debt and working capital as per closing of the transaction. The transaction is expected to release approximately NOK 900 million in cash for Akastor.
Frontica staffing business, Frontica Advantage, is not a part of the transaction and will continue as an Akastor portfolio company. Certain other business segments of Frontica Business Solutions, not related to the core ITO and BPO services, are not included in the transaction scope.
Closing of the transaction is expected to take place in Q4 2016. ABG Sundal Collier ASA has acted as exclusive financial adviser to Akastor, and BA-HR lawfirm as legal advisor.