Cognizant to appoint 3 directors, buy back $3.4 billion worth of shares

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Bengaluru: IT services provider Cognizant Technology Solutions Corp., bowing to pressure from activist investor Elliott Management, agreed to appoint three directors and return $3.4 billion to shareholders.

Elliott disclosed a more than 4% stake in Cognizant in November and had urged the IT services provider to take steps to boost shareholder value.

Cognizant said it’s board has approved a plan to return $3.4 billion to shareholders over the next two years through share buybacks and dividend.

The company reported fourth-quarter revenue that narrowly missed analysts’ estimates while profit beat by a cent.

The company expects to start the repurchase of $1.5 billion worth of shares in the first quarter, initiate a cash dividend of 15 cents per share in the second quarter and repurchase $1.2 billion shares during 2017 and 2018.

Elliott had earlier urged that Cognizant should consider a $2.5 billion share buyback, acquisitions and initiate a dividend, among other measures to boost its shares.

Separately, Cognizant said fourth-quarter revenue rose about 7% to $3.46 billion from $3.23 billion helped by ongoing demand for its cloud services