Infosys in talks to acquire Spanish consulting firm

Move fits into strategy to expand in Europe, add to consulting capability

Infosys, India’s second largest IT services company, is in talks with Everis, a Spanish consulting company, for a possible acquisition.

Started in 1996 as DMR Consulting, Everis employed 9,000 consultants globally as of March 31, 2011. In the fiscal year ended March 31, 2011, the company reported €506 million (approximately $635 million) in revenues, with an operating profit of €46 million (about $58 million). Though the company updates its annual financial numbers towards April every year, the FY12 results have not been posted on its website.

In 2007, the company’s management bought out its institutional shareholders Apax Partners and Financial Managers. Currently, 66 per cent of the company is owned by the management team and employees while the rest is owned by British investment funds 3i and Hutton Collins, Landon Group and a group of minority shareholders, according to the company’s website.

Infosys said it “does not comment on rumours and speculations”. An email to Everis went unanswered.

Sources familiar with the developments said talks were moving at a slow pace over valuation issues. Everis is also said to be not doing well because of the euro zone crisis that has affected many European countries, including Spain. The Madrid-headquartered Everis derives about 70 per cent of its revenues from Spain, which has been affected severely by the crisis.

Infosys has, time and again, said the company is looking at acquisition targets in the European market as a vehicle to penetrate deep into the geography and add to its consulting capabilities. That has now come to the fore as a part of the Infosys 3.0 strategy. In 2008, the company had made an attempt to acquire European consulting company Axon, which was finally acquired by HCL Technologies.

In a recent interview with a private television channel, Infosys CEO & MD S D Shibulal said an acquisition in Europe would make sense, as the company was focusing on that geography. He also said ‘consulting’ was an area relevant for acquisitions in that geography. However, he said the company was comfortable spending about 10 per cent of its revenues (about $700 million) for acquisition purposes.

Infosys had a cash reserve of $3.24 billion (Rs 18,031 crore) as on June 30, 2012.