Infosys Ltd, which sits on the largest cash pile among India’s computer-services providers, is prepared to spend $500 million on a single acquisition in a European market. Infosys may make another attempt to acquire a company of that size after it walked away from a plan to buy UK-based Axon Group Plc for £407 million ($644 million) in 2008, Chandrashekar Kakal, the company’s global head of business information technology (IT) services, said in a telephone interview.
“We do have cash, but we are looking for a company which adds to our capability and becomes complementary to our growth rather than becoming a laggard,” he said.
Infosys’s war chest of $4 billion is more than twice the size that of Tata Consultancy Services Ltd (TCS) Indian software companies, after a decade of growth fuelled by the outsourcing of jobs from the US, are turning to acquisitions to expand into Europe, now the second-largest source of their revenues. Making purchases in Europe may help Bangalore-based Infosys achieve a target of getting 40 per cent of its sales from the region, up from about 22 per cent.
The company’s shares fell as much as 1.8 per cent to Rs 2,358.65 in Mumbai trading and were down 1.3 per cent at 12.33 pm. The stock has declined 14 per cent this year, valuing Infosys at Rs 1.36 trillion ($26.4 billion).
In 2008, Infosys decided against further pursuing a plan to buy Axon after its bid was trumped by New Delhi-based HCL Technologies Ltd. In 2006, Infosys spent $115 million to purchase Citigroup Inc’s stake in Progeon Ltd, a back-office service provider controlled by Infosys.
The company may also make a number of smaller purchases worth about $30 million to $50 million each, Kakal said in the interview on April 13, adding that such companies would be easier to integrate. He declined to identify potential targets or specify sectors where acquisitions may be made.
TCS chief N Chandrasekaran today took over as Nasscom Chairman for 2012-2013, the software industry body.