Corrected: UPDATE 3-India's Persistent shares slump after $1.1 billion offer to buy Germany's Nagarro

Persistent Systems

29/06/2026 05:42

Corrects paragraph 1 to say shares fell as much as 11.9%, not 10.6%

    June 29 (Reuters) - 
    Shares of India's Persistent Systems PERS.NS fell as much as 11.9% to a near 15-month low on Monday after its 1 billion euro ($1.14 billion) 
    bid
     for Germany's Nagarro NA9n.DE, as analysts questioned the valuation and flagged integration and margin risks.
  

    The stock closed 11.2% lower at 4,298.50 rupees, hitting its lowest since April 2025 and marking its steepest intraday fall since October 2018.
Persistent offered over the weekend to buy the AI-led digital engineering firm for 81 euros per share, a 100% premium to Nagarro's Friday close. Nagarro's board plans to recommend the offer to shareholders.
       
     If completed, the deal would be Persistent's largest acquisition, dwarfing its $90.5 million purchase of consulting firm Data Glove in 2022.
The merger would expand Persistent's European presence and add segments such as automotive and industrials. However, valuations appear "excessive" given Nagarro's relatively low growth profile, UBS analysts said.
     
INTEGRATION CHALLENGES 
Analysts also flagged risks from integrating a large acquisition and funding it through a bridge facility.
Persistent's stock faces a near-term overhang from execution risks, potential earnings-per-share dilution and higher balance-sheet leverage, Emkay analysts said.
Persistent said the deal would create a globally diversified AI-led digital engineering firm, with a scaled presence in North America and Europe.
Nagarro's organic revenue fell 1.1% in the first quarter, with analysts saying the start to 2026 was slow and reflected continued softness in demand.
The deal will be funded through a committed 1.4 billion euro bridge facility, including potential refinancing of Nagarro's debt, Dolat Capital analysts said.
"Funding the deal via a 1.4 billion euro bridge facility elevates balance sheet leverage, and consolidating Nagarro's lower-margin profile poses immediate margin dilution," they said.
     
($1 = 0.8782 euros)
     

 (Reporting by Abhirami G, Abinaya V and Sai Ishwarbharath B in Bengaluru; Editing by Rashmi Aich and Nivedita Bhattacharjee)
 ((abhirami.g@thomsonreuters.com))