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Cognizant (CTSH) to Buy Custom Software Developer Magenic

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Zacks Equity Research
·4 min read
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Cognizant Technology Solutions CTSH recently entered into an agreement to acquire Magenic Technologies, a privately-held custom software development services company headquartered in Minneapolis, MN. The financial details were not disclosed.

The acquisition is expected to expand Cognizant’s software product engineering footprint as Magenic provides agile software and cloud development, DevOps, experience design, and advisory services to clients across industries, including financial services, professional services, insurance, pharmaceutical, and manufacturing.

Upon completion of the acquisition, which is expected to close in the first quarter of 2021, Magenic employees will become part of Cognizant Softvision, connecting Magenic's expertise with Cognizant's global software development capabilities.

Per the agreement, the company will take over Magenic’s 475 employees in the United States, spanning seven locations and 350 employees in Manila, Philippines.

Markedly, Cognizant’s shares have gained 31.5% year to date compared with the Zacks Business - Software Services industry’s growth of 44.6%.

One Year Performance

Strengthening Digital Capabilities Through Accretive Acquisitions

Magenic is Cognizant’s third acquisition in 2021, and the 12th announced since January 2020, as the company focuses on expanding its footprint in cloud transformation, digital engineering, data and artificial intelligence, and Internet of Things (IoT) capabilities.

Markedly, excluding Magenic, the company has invested over $1.4 billion in acquisitions over the past 12 months.

On Jan 11, Cognizant announced that it has agreed to acquire Linium, a cloud transformation consultancy group specializing in the ServiceNow platform and solutions for smart digital enterprise workflows. Completing this transaction will further accelerate Cognizant's cloud strategy.

Additionally, the company announced the acquisition of Servian, an Australia-based, privately held enterprise transformation consultancy specializing in data analytics, artificial intelligence, digital services, experience design and cloud. The acquisition of Servian significantly expands Cognizant's integrated, end-to-end digital transformation capabilities in Australia and New Zealand (“ANZ”).

Moreover, acquisitions of Inwisdom, Merisoft, Zenith Technologies, Contino, Code Zero, El-Technologies, Tin Roof Software and 10th Magnitude are strengthening the company’s digital capabilities and clientele.

Inawisdom’s Rapid Analytics and Machine Learning Platform (RAMP), developed using Amazon’s AMZN cloud platform Amazon Web Services’ (AWS), helps Cognizant deliver machine learning solutions and end-to-end cloud-native artificial intelligence-driven data analytics to its customers.

Meanwhile, the acquisition of 10th Magnitude deepens Microsoft MSFT Azure’s cloud-computing expertise within Cognizant's New Microsoft Business Group in the United States.

Further, the buyout of global consultancy company, Collaborative Solutions, which specializes in Workday WDAY enterprise cloud applications, extends Cognizant’s cloud offerings by adding new finance, and human resource advisory and implementation services to the portfolio.

These acquisitions have helped the company expand in countries like Ireland, France and Canada. The acquisition of New Signature expands this Zacks Rank #3 (Hold) company's hyperscale cloud advisory services. Notably, New Signature is one of the world's largest independent Microsoft public cloud transformation specialists.

Notably, Cognizant’s bookings grew 25% year over year, driven by continued strength in digital bookings led by the ongoing digital transformation wave. The company is expected to boost its enterprise clientele from the expansion of its digital capabilities portfolio with acquisitions over the long haul.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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