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Wipro may buy Infocrossing for $500mn

BS Reporter  |  Bangalore 

IT major also looking at acquisitions in Germany and Canada.
Wipro, the country's second largest information services provider, is closing in on US-based Infocrossing for around $500 million (around Rs 2,000 crore).
The $232.44 million Infocrossing and its wholly-owned subsidiaries provide IT outsourcing solutions to companies, institutions, and government agencies in the US.
The company's enterprise value is around $492 million and its enterprise value/revenue is 2.12 times. An analyst said this would prove to be a "reasonable buy" for Wipro. Besides, it will give Wipro readymade clients in the institutional and government arenas in the US.
A Wipro spokesperson, however, said the company "does not react to market speculation".
Wipro Technologies has also said it is looking at acquisitions in Germany and Canada. This would help the company expand its footprint in those countries.

WIPRO'S ACQUISITION APPETITE

Acquired entity

Nature of business

Period Deal size
3D Networks
and Planet PSG
Communication
solutions
Nov-06 23
Quantech Computer-aided design
and engineering services
Jul-06 10
Saraware Oy design and
engg. services
Jun-06 32
Enabler Retail solutions Jun-06 52
cMango Business management
service solutions
Apr-06 20
Unza FMCG Jul-07

246*

* Approximately $246 million in an all cash deal (All figures in $million)
"We are looking at taking the inorganic route to expand in Germany and Canada. Germany is an emerging market and in Canada we are a late entrant," said Wipro Chairman Azim Premji while announcing the first quarter results for this financial year.
Acquisitions contributed Rs 501.1 crore to Wipro's topline of Rs 15,000.8 crore in financial year 2007, against Rs 50 crore in financial year 2006. The Bangalore-headquartered company, which is sitting on cash reserves of about Rs 3,200 crore (as on June 30, 2007), prefers cash acquisitions to equity. The company has a central team that looks at two to three deals at any given point of time.
And contrary to the relatively-smaller acquisitions the company made in 2005-06, Wipro is now looking at acquisitions of a larger size in the ongoing financial year. The combined value of all the acquisitions made in FY06 was around $120 million.
"Previously, we made small acquisitions in the range of $30-60 million. Now we have an appetite for larger acquisitions of over $100 million. With the acquisitions in the past contributing significantly to the company's profitability, we feel that we have the capability to manage larger acquisitions now," Sudip Banerjee, president, Enterprise Solutions Division, Wipro Technologies, had told Business Standard this April.
In 2005-06, Wipro's IT businesses had made five acquisitions, the last one being the acquisition of 3D Networks and Planet PSG made by Wipro Infotech.
The possible acquisitions the company is eyeing in the current fiscal are in the areas of pharmaceuticals and avionics. The company is looking at companies in the US and continental Europe in the infrastructure, package implementation, drug discovery and analytics areas of pharma.

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First Published: Sat, August 04 2007. 00:00 IST
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