THEREâ€™S no stopping Wiproâ€™s acquisition juggernaut. The software
behemoth unveiled its biggest buyout till date, and the largest for the
Indian IT industry. Wipro Technologies has signed a definitive
agreement to acquire the Nasdaq-listed Infocrossing for $18.70 per
share, pegging the enterprise valuation of the IT infrastructure
management services firm at $600 million, including $60-million debt,
in an all-cash deal.
This marks Wiproâ€™s 12th acquisition in the IT space and the ninth in the last 24 months alone, in what is being famously tagged as â€œstring of pearlsâ€ strategy. The entire process of acquiring Infocrossing is likely to close by December, and the acquired entity will be merged with Wiproâ€™s subsidiary in the USâ€”Wipro Inc. This buyout brings in revenues of $232.4 million with 900 people spread across five locations in the US. Wipro, for the first time, is in the process of acquiring a publicly-held company. â€œThis acquisition is a perfect fit for our technology infrastructure services (TOS), and gives us an undisputed lead in remote infrastructure management services,â€ said Wipro CFO Suresh Senapaty.
The current global IT infrastructure market is estimated to be around $150 billion, and around $70 billion is projected as offshorable. However, the operating margins of Infocrossing, which range between 10-14%, do not exactly match up to the Wipro Technologiesâ€™ margin of around 25%. But Mr. Senapaty said there are lot of synergies between the companies, and the margin difference will be mitigated in the next 2-3 years.
It may be mentioned that Infocrossing reported a net of $8.5 million on a top line of around $230 million in 2006. The price being paid by Wipro is a 13% premium over the six-month average of Infocrossingâ€™s stock value.
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