Tata Consultancy Services Ltd has agreed to acquire Postbank Systems AG from Deutsche Bank AG in a deal that will ramp up the European business of India’s largest software services exporter.
The transaction value will be a symbolic one euro, TCS said in a stock-exchange filing.
The deal is part of Deutsche Bank’s efforts to meet the target of cutting 18,000 jobs that it announced last year to lower costs and return to profitability.
Germany’s largest lender and TCS said Postbank Systems and its around 1,500 employees will become part of the Mumbai-based company.
The deal will deepen the relationship between the two organisations as Deutsche Bank is already a TCS client. This will also add to TCS’ scale in Germany and strengthen its growth outlook.
Postbank Systems is the captive IT services firm that provides project management, application management and infrastructure support services to Deutsche Bank, its unit Postbank AG and other subsidiaries.
Postbank Systems reported revenue of €530 million for 2019, up a tad from €525 the year before. However, it will sell significant assets and pass through contracts to Deutsche Bank, TCS said, adding that the expected revenue in 2021 will be about €260 million.
The transaction is subject to both parties finalising further agreements, which they intend to do by end-2020. It is also subject to customary regulatory and governmental approvals.
Although TCS is India’s largest IT firm it has grown mostly organically and has been a very conservative buyer. In contrast, other top IT firms such as Infosys Ltd, Wipro Ltd and HCL Technologies Ltd have struck many acquisitions overseas in recent years to grow operations or beef up their skills in certain domains or emerging technologies.
The Tata Group company struck its biggest acquisition in 2008 when it bought Citigroup’s captive business process outsourcing unit in India for $505 million.