As part of its efforts to expand its digital capabilities, Accenture plc ACN recently closed the buyout of retail strategy and digital transformation services provider, Javelin Group. The financial terms of the buyout, which was announced on May 18, 2015, remained undisclosed.
Founded in 1997 and based in the UK, Javelin Group focuses on retail planning and analytics as well as digital technology services. It offers a range of services, which includes digital market assessment and potential evaluation, digital performance improvement and supply chain management.
The company currently employs over 160 dedicated professionals. Following the acquisition, Accenture will now be able to strengthen its position as a leading provider of retail solutions to better supply the fast growing international retail market. Moreover, the combined strength of the companies will facilitate faster and more efficient delivery of products and services to their customers in a cost effective manner.
Accenture intends to integrate the operations of Javelin Group under its Accenture Strategy business. The acquisition will help Accenture to expand its presence in the digital and retail market with the potential to boost its market share.
The retail industry is highly competitive and encounters significant challenges. Consumers today are knowledgeable and are seeking innovative solutions to create value, reduce costs and mitigate the risks of supply chain ineffectiveness. The acquisition of this consulting and technology services provider to retailers will help Accenture to improve consumer experience through better service and improved product availability.
Accenture already has a broad-based analytics portfolio, which we think will be augmented with Javelin Group analytics services and solutions. Considering the growing need for strategy consulting, we expect Accenture’s investments in consulting capabilities to boost long-term growth. This will also enable the company to effectively compete with other consulting service providers, such as International Business Machines Corp. IBM, Dell and Deloitte.
Accenture resorts to strategic acquisitions to diversify its offerings and expand its operating markets. A strong cash balance ($4.03 billion) and operating cash flow ($1.41 billion in the third quarter of 2015) enable it to pursue frequent acquisitions.
Last month, Accenture plc announced the acquisition of Tquila UK — one of the leading independent consulting service providers of salesforce.com Inc. CRM in Europe. The move was expected to be part of Accenture’s strategy of strengthening its position across Europe as a provider of Salesforce services and cloud implementations.
We are encouraged by Accenture’s strategy of growing through acquisitions. However, we remain slightly cautious due to its tepid fourth-quarter fiscal 2015 outlook. Increasing competition from Cognizant Technology Solutions Corp. CTSH and a sluggish economic recovery may dampen growth.
Accenture carries a Zacks Rank #2 (Buy).
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