Farallon Capital starts new position in Cognizant Tech Solutions


Jan. 13 2015, Updated 4:00 p.m. ET

Cognizant Technology Solutions position

During the third quarter, Farallon Capital Management initiated a position in Cognizant Technology Solutions (CTSH). The position accounted for 2.06% of the fund’s 3Q14 portfolio.

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CTSH in brief

Cognizant Technology Solutions is a leading provider of information technology, consulting, and business process services. Its clients include some of the world’s most prominent companies.

3Q14 results

CTSH reported third-quarter revenue of $2.58 billion, up 2.5% sequentially and 11.9% year-over-year. Net profit was $355.6 million, down 4.3% sequentially and up 11.3% year-over-year. Demand from North America drove this growth and contributed 77% to total revenue.

North America reported 2.7% sequential growth. In Britain, revenue was up by 4.4%. In the rest of Europe, revenue declined by 2.6%.

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Healthcare sector involvement

CTSH is investing in healthcare services to provide end-to-end solutions to its clients. The company has entered into a seven-year master services agreement with Health Net Inc. (HNT). Cognizant said, “Transformative engagement with Health Net is of the largest contract value in the history of the company.”

On November 20, 2014, Cognizant acquired TriZetto Corp. for $2.7 billion in an all-cash deal to expand into the area of healthcare industry software. TriZetto’s software manages the health benefits of about 50% of the insured population in the US and supports about 25% of all US healthcare providers. CTSH said, “The deal will bring in additional revenue of about $1.5 billion in the next five years.” Together, the two companies will serve nearly 245,000 healthcare providers.

On October 17, 2014, CTSH announced its purchase of Cadient Group, an online ad agency focused on the pharmaceutical, biotechnology, consumer health, and medical device industries. Cognizant said that this acquisition will further expand the scope of digital marketing capabilities for its clients.

Acquisition of Odecee

Cognizant also recently bought Odecee, a digital solutions company in Australia. CTSH said that this strategic acquisition will help bolster the company’s presence in Australia and will strengthen its digital capabilities.

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Revenue forecast lifted

CTSH revised its full-year revenue guidance. For 2014, the company expects revenues to be between $10.13 billion and $10.16 billion.

Other 3Q14 activities at Farallon

During the third quarter, Farallon Capital also started new positions in Time Warner Inc. (TWX), Tim Hortons Inc. (THI), and International Game Technology (IGT). The fund increased its positions in DIRECTV (DTV), Covidien plc (COV), Allergan Inc. (AGN), and Shire plc (SHPG). Positions sold by Farallon during the third quarter include Yahoo! Inc. (YHOO), Oracle Corp. (ORCL), and Weyerhaeuser Co. (WY).

Farallon’s new position in DIRECTV is the subject of the next part of this series.


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