Why Accenture Stock Slumped Today

Accenture (NYSE: ACN) was in the news Tuesday for yet another of the acquisitive company's asset buys. Investors weren't particularly impressed with this one, as they generally traded out of the stock following its announcement. Accenture's share price eroded by more than 2% on a day when the S&P 500 index basically traded flat.

Another asset buy

Before market open that morning, the frequently acquisitive Accenture announced that it has agreed to purchase privately held AOX. The company's asset-to-be is a Germany-based business that concentrates on software for vehicle manufacturers and the companies that supply them.

In revealing its news, Accenture did not disclose the price nor the terms of the deal.

It did quote Christina Raab, its market unit lead in Germany, Austria, and Switzerland, as saying that "In combining AOX's and Accenture's capabilities we will form a strong player that develops software from the chip to the cloud, covering the complete life cycle from architecture design to maintenance."

The latter company said that AOX's employees, which number around 50, will be folded into Accenture's Industry X division.

A lack of detail

From a strategic standpoint, the AOX acquisition appears to make sense. The auto industry these days is very dynamic, with technological change coming at a rapid pace. Assuming it integrates AOX effectively into its portfolio, Accenture can strengthen its offerings in this ever-evolving and busy field.

That said, investors dislike when they're not provided much information about a deal touted as being important. That's because it can be tough, or even impossible, to gauge whether the buyer is being opportunistic and acquiring an asset relatively cheaply, or is overpaying for a business that might not produce a sufficient return. Accenture might be better served providing more details of this buy.

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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.