Consulting and outsourcing company Accenture (ACN - Analyst Report) is set to acquire Procurian for $375 million. The acquisition will enhance Accenture’s competence in procurement business process outsourcing (BPO). The all-cash deal is expected to be closed by this year.
Procurian, a subsidiary of ICG Group, Inc. , is headquartered in King of Prussia, Pa., and provides comprehensive and strategic procuring and sourcing business process services. It acts as a sourcing partner to BPO service providers such as Genpact and Capgemini. Procurian’s clients include the likes of Hertz and Kimberly Clark. Procurian has offices in the U.S., India, the U.K., the Czech Republic, China and Brazil and employs approximately 780 employees.
The acquisition not only better positions Accenture in the procurement segment compared to other service providers such as International Business Machines (IBM - Analyst Report) and Infosys (INFY - Analyst Report) , but also eliminates a direct competitor. Moreover, Accenture can leverage Procurian’s core competencies in the procurement outsourcing market, with its various tools and applications, to gain new clients and serve the existing ones in a better manner.
Accenture has been on an acquisition spree and has already acquired eight companies in 2013. Acquisitions have not only expanded the company’s customer base but have also improved its bookings and performance in the insurance, banking and healthcare sectors. This also reflects the effectiveness of Accenture’s services, which is in turn favorable for its long-term growth prospects.
Moreover, in the recently concluded quarter, Accenture recorded higher bookings growth and solid performance across insurance, banking and healthcare segments. Additionally, the company’s associations with Vodafone and Telenor for providing IT services are expected to benefit, going forward.
However, a strained spending environment and Accenture’s broad European exposure may temper its growth prospects to some extent.
Currently, Accenture has a Zacks Rank #3 (Hold).