Capgemini SE

Revenue and costs synergies (we anticipate revenue synergies of €100 million in 2021, €200 million in 2022, and €275 million per year by 2023; and cost synergies of €50 million in 2021, and up to €100 million per year by 2022); A rebound from the pandemic effects; and Higher free cash flow generation supporting net debt reduction. Although we expect the pandemic's negative macroeconomic effect to linger over 2021, particularly regarding core IT spending, we expect previous industry projections to resume by 2021, supporting our forecast revenue growth. This is because digitization across businesses is at an unprecedented level, and will remain a long-term trend. We thus expect Capgemini and Altran will see annual revenue growth of 4% and 5%,

...Following Capgemini's acquisition of Altran Technologies SE, we expect pro forma debt to EBITDA will weaken to about 3.8x in 2020, before improving to 3.0x or below within the following two years, supported by synergies. In April 2020, Capgemini increased its stake in France-based engineering and research and development (R&D) provider Altran to 100% from the 11.43% it purchased in 2019 (final price at 14.50 per share). Capgemini funded the acquisition with about 1.0 billion of its own cash and by drawing under its committed 5.4 billion bridge facility (later reduced to 4.4 billion), which it later refinanced alongside Altran's debt of 1.7 billion with parts of the proceeds from its 5.1 billion of unsecured notes issued in April and June 2020. We anticipate that adjusted leverage should improve to 3.0x or below within two years, owing to:...

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