A lack of detail about the company’s latest acquisition left some investors cold.
The stock of tech-focused consultancy Accenture (ACN -0.88%) couldn’t quite keep pace with the rest of the equity market on Wednesday. The company’s shares closed the day nearly 1% lower, on news that it’s opening its wallet to buy a cutting-edge technology business. By comparison, the benchmark S&P 500 index landed in positive territory at roughly the same percentage rate.
Boosting its chip design expertise
Accenture’s new asset is Cientra, a privately held U.S. company with a presence abroad in both Europe (specifically Germany) and India. The move seems rather synergistic, as Cientra is a peer. In Accenture’s words, the company “brings consulting expertise in embedded IoT and application-specific integrated circuit design and verification capabilities.” Accenture added that this will complement its own expertise in microprocessor design.
The big consultancy did not disclose either the price or the terms of the deal. Investors tend not to like uncertainty, so this was probably one factor in their mildly negative reaction to the news.
On the plus side, the acquisition will provide an immediate and tangible boost to Accenture’s efforts in this important tech industry segment. Cientra has a large workforce of around 530 engineers, who will be staffed at Accenture’s advanced technology centers in India.
Always on the hunt for acquisitions
For quite some time, Accenture has been fond of building out its business through acquisitions. In fact, earlier this week it announced another one, that of India-headquartered semiconductor design services provider Excelmax Technologies. Stretching back a few years, in 2022 it purchased and absorbed a similar business, Canada’s XtremeEDA.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Accenture Plc. The Motley Fool recommends the following options: long January 2025 $290 calls on Accenture Plc and short January 2025 $310 calls on Accenture Plc. The Motley Fool has a disclosure policy.