Information technology (IT) services firm Tata Consultancy Services (TCS) is set to acquire Bonn-based Postbank Systems, the technology services unit of Deutsche Bank, by the end of 2020.
The deal will help TCS scale its presence in Germany and strengthen its growth outlook, a statement said. The transaction value, the Mumbai-based firm said in a stock exchange filing, will be a symbolic €1.
Post deal, the 1,500 Postbank Systems employees will join TCS, the statement said.
“We are pleased to deepen our long-standing partnership with Deutsche Bank, continue to help accelerate their digital transformation and to acquire market specific capabilities in the banking domain. We warmly welcome Postbank Systems’ IT professionals into the TCS family… and help script the next chapter of TCS’ growth in Germany,” NG Subramaniam, COO and executive director of TCS, said.
Postbank Systems offers full-range captive IT services, such as project management, application management and infrastructure support services, to Deutsche Bank subsidiaries.
The revenue of the firm, which was recorded at €530 million for 2019, is expected to come down to €260 million in 2021 as the entity will sell significant assets and pass through contracts to Deutsche Bank, TCS said in the filing.
“As part of our move to one technology organisation, we are consolidating the IT platform for our retail banking brand Postbank into the Deutsche Bank platform. With this transaction, we agreed on a structure that meets all parties’ interests. It provides clarity to Postbank Systems staff and the opportunity to become part of the success and growth story of TCS,” Bernd Leukert, chief technology, data and innovation officer at Deutsche Bank, said.
TCS in 2019 signed an agreement with automaker General Motors to support the latter’s global vehicle programmes with engineering design services for five years. As part of the partnership, TCS was to acquire certain assets of the GM Technical Center, India (GMTC-I), in Bengaluru, and onboard more than GMTC-I 1,300 employees.
In 2008, the IT services major acquired Citigroup’s captive business processing outsourcing (BPO) unit in India for $505 million.
The firm’s primary rivals have also made several acquisitions in the recent past.
Wipro, on the other hand, bought San Jose, California headquartered Eximius Design, Chennai-based firm Encore Theme Technologies, European Salesforce multi-cloud partner 4C and Brazilian firm IVIA Serviços de Informática.
In September, HCL announced its intent to acquire a 100% stake in Australian IT solutions firm DWS for about $115.6 million in an all-cash deal.
Separately, India’s largest software exporter, TCS, reported a 7% decrease in quarterly profit for the second quarter of financial year 2020-21. Its net profit fell to Rs 7,475 crore from Rs 8,042 crore a year ago. Its Q2 revenue, meanwhile, rose about 3% to Rs 40,135 crore.
The company also announced the restoration of salary hikes from October 1, as well as a Rs 16,000 crore share buyback for its investors.