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Cognizant To Buy Privately Held Healthcare Firm TriZetto For $2.7 Bln Cash
[September 15, 2014]

Cognizant To Buy Privately Held Healthcare Firm TriZetto For $2.7 Bln Cash


(dpa-AFX International Compact Via Acquire Media NewsEdge) TEANECK (dpa-AFX) - Cognizant Technology Solutions Corp. (CTSH), a provider of IT, consulting, and BPO services, announced Monday that it has entered into a definitive agreement to acquire privately held TriZetto Corp. for $2.7 billion in cash.



TriZetto, a provider of healthcare information technology and service solutions, is currently owned by Funds advised by Apax Partners, together with minority investors BlueCross BlueShield of Tennessee and Cambia Health Solutions.

In its statement, Apax Partners said it has agreed to sell their majority ownership stake in the TriZetto, and the deal would close during the fourth quarter, subject to customary closing conditions and regulatory approvals.


Cognizant CFO Karen McLoughlin said the transaction is expected to be immediately accretive to the firm's non-GAAP earnings per share, excluding one-time transaction costs and adjustments. The earnings benefit is expected to increase over time as the firm realizes significant revenue synergy potential from the combination of these businesses.

Cognizant also expects the acquisition to accelerate significantly its market position and strategy of delivering innovative healthcare software and solutions to a wide range of healthcare clients. The deal is subject to customary adjustments.

TriZetto develops, licenses and manages solutions for healthcare payers and providers, providing software and services to approximately 350 health plans. It also provides revenue-cycle management software solutions to nearly 245,000 doctors and other healthcare providers. It was in 2008 that private equity investment firm Apax Funds and other minority investors acquired TriZetto.

With the acquisition, Cognizant would have multiple software platforms used by payers and providers, enhanced competitiveness in integrated engagement opportunities, as well as about $1.5 billion of potential revenue synergies cumulatively over the next five years.

Following the deal, TriZetto and its 3,700 employees will be a part of Cognizant's existing healthcare business, which currently serves more than 200 clients. Healthcare currently represents approximately 26 percent of Cognizant's revenue. The combined healthcare revenue, following the deal, would be more than $3 billion.

Francisco D'Souza, CEO of Cognizant, 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." Cognizant said it intends to finance the transaction through a combination of cash on hand and debt, and has secured $1 billion of committed financing.

In the deal, Cognizant was advised by Credit Suisse, UBS Securities LLC and Centerview Partners. TriZetto was advised by JP Morgan Securities LLC and Goldman, Sachs & Co.

In pre-market activity, Cognizant shares were gaining $1.33 or 2.97 percent, and trading at $46.09.

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