Wipro to acquire SAIC's IT wing in Rs 675-cr deal

Deal to be completed by June; 1,450 SAIC staff to make transition to Wipro

India’s third largest information technology services provider, Wipro Technologies, announced it would acquire Science Applications International Corporation's (SAIC) global oil and gas information technology practice for an all-cash consideration of around $150 million (Rs 675 crore).

SAIC is a Fortune 500 multinational company, headquartered in the US. As a result of the transaction, approximately 1,450 of its employees would make transition to Wipro across North America, Europe, West Asia and India.
 

WIPRO’S RECENT DEALS
Year	Acquisition target	Value*
2011	SAIC’s oil & gas IT practice	$150 mn
2008	Citi Technology Services	$127 mn
2007	Infocrossing	$600 mn

SAIC’s global oil and gas IT practice provides consulting, system integration and outsourcing services to global oil majors with domain capabilities in the areas of digital oil fields, petro-technical data management and petroleum application services, addressing the upstream segment. Completion of the acquisition is subject to customary closing conditions and regulatory approval.

Wipro, in its recent restructuring, had added natural resources to its energy and utility business units. With this buyout, it expects a contribution of $188 million (Rs 846 crore) in absolute terms to its top line on an annual basis from the acquired business unit. At the end of 2009-10, the energy and utility business unit's contribution to the company's revenue was 10 per cent. With this acquisition, the contribution will go up to 11.1 per cent.

The deal is expected to be completed by end-June. The funding is being done through internal resources.

“SAIC also brings in a strong client base for Wipro. The top 10 clients account for 90 per cent of their total revenue. Of the top 10, six are from Fortune 500 companies. For Wipro, the acquired business also provides complementary revenue and a strong customer base,” said Anand Padmanabhan, senior vice-president.

Globally, IT spending in the oil and approximately 1,450 of its employees would make transition to Wipro across North America, Europe, West Asia and India.natural gas sector has been growing at a compounded annual rate of 10 per cent and is expected to cross $19 billion by 2013. Padmanabhan further said, “Oil and gas companies are investing in upstream business, while looking at rationalising cost through IT. The acquisition will strengthen our existing energy business unit.”

This acquisition comes after an interval of two years. In 2008, Wipro Technologies had acquired Citi Technology Services for $127 million. Wipro has been more aggressive on acquisition when compared to peers such as Tata Consultancy Services and Infosys Technologies. In 2007, it had acquired Nasdaq-listed Infocrossing for $600 million (Rs 2,700 crore).