LONDON – Cognizant Technology Solutions said on Monday that it had agreed to buy the health care information technology company TriZetto Corporation for $2.7 billion in cash.
Cognizant, a large outsourcing firm, will acquire a majority stake from funds managed by the private equity firm Apax Partners, as well as stakes from minority investors, BlueCross BlueShield of Tennessee and Cambia Health Solutions. The Apax funds acquired their stake in the company in 2008.
The deal is expected to bolster Cognizant’s health care business by creating a combined company with more than $3 billion in revenue from their health care operations and serving health plans that provide coverage to about 180 million Americans.
“This acquisition is a natural fit for us. It represents a great opportunity to integrate services across our three horizons — traditional IT services; high-growth businesses such as management consulting, business process services and IT infrastructure services; and emerging delivery models—and provide even greater value to our clients,” Gordon Coburn, the Cognizant president, said in a news release.
The deal is subject to regulatory approval and is expected to be completed in the fourth quarter.
Founded in 1997, TriZetto, based in Englewood, Colo., develops and licenses information technology services for health care providers and health plans.
TriZetto has about 350 health plans and nearly 245,000 doctors and other health care providers as customers. It employs about 3,800 people in the United States and India.
“The combination of TriZetto with Cognizant will bring a whole new level of capability to the market,” R. Andrew Eckert, the TriZetto chief executive, said in a statement. “I’m excited about what this means to both companies as well as the markets and clients that we serve.”
Cognizant said it planned to finance the transaction via a combination of cash on hand and debt.
Based in Teaneck, N.J., Cognizant is a provider of information technology, consulting and other outsourcing services. It employs about 187,000 people and posted revenue of $8.8 billion in 2013.
Apax, a private equity firm based in London, typically invests in companies valued at 1 billion euros to 5 billion euros, or about $6.5 billion. It invests in four sectors; consumer, health care, services and technology and telecommunications.
JPMorgan Chase and Goldman Sachs and the law firm Kirkland & Ellis advised TriZetto, while Cognizant was advised by Credit Suisse, UBS and Centerview Partners and the law firms Latham & Watkins and Nishith Desai Associates.
Date: September 15, 2014