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From the News Desk
Tuesday, 7. August 2007
Wipro Buys Infocrossing For USD 600 M
India’s third largest IT services company Wipro has acquired the Nasdaq-listed Infocrossing for USD 18.70 per share, pegging the enterprise valuation of the IT infrastructure management services firm at USD 600 million, including USD 60-million debt, in an all-cash deal.
This is Wipro’s 12th acquisition in the IT space and the ninth in the past 24 months alone, in what is being famously tagged as ‘string of pearls’ strategy.
The entire process of acquiring Infocrossing is likely to close by December 2007, and the acquired entity will be merged with Wipro’s subsidiary in US — Wipro Inc. This buyout brings in revenue of USD 232.4 million with 900 people spread across five locations in the US.
This is the first the Bangalore headquartered Wipro has acquired a publicly held company.
“This acquisition is a perfect fit for our technology infrastructure services (TOS) and gives us an undisputed lead in remote infrastructure management services,” said Wipro CFO Suresh Senapaty. The current global IT infrastructure market is estimated to be around USD 150 billion. Around USD 70 billion is projected as offshorable.
However, the operating margins of Infocrossing, which range between 10 per cent and 14 per cent, does not exactly match up to the Wipro Technologies’ margin of around 25 per cent. However, Senapaty said there are lots of synergies between the companies, and the margin difference will be mitigated in the next 2-3 years time.
Infocrossing reported a net income of USD 8.5 million on a topline of around USD 230 million in 2006. The price paid by Wipro is 13 per cent premium over the six-month average of Infocrossing’s stock value. Senapaty said this would be a one-time transaction and the tender offer would be announced later.
This is Wipro’s 12th acquisition in the IT space and the ninth in the past 24 months alone, in what is being famously tagged as ‘string of pearls’ strategy.
The entire process of acquiring Infocrossing is likely to close by December 2007, and the acquired entity will be merged with Wipro’s subsidiary in US — Wipro Inc. This buyout brings in revenue of USD 232.4 million with 900 people spread across five locations in the US.
This is the first the Bangalore headquartered Wipro has acquired a publicly held company.
“This acquisition is a perfect fit for our technology infrastructure services (TOS) and gives us an undisputed lead in remote infrastructure management services,” said Wipro CFO Suresh Senapaty. The current global IT infrastructure market is estimated to be around USD 150 billion. Around USD 70 billion is projected as offshorable.
However, the operating margins of Infocrossing, which range between 10 per cent and 14 per cent, does not exactly match up to the Wipro Technologies’ margin of around 25 per cent. However, Senapaty said there are lots of synergies between the companies, and the margin difference will be mitigated in the next 2-3 years time.
Infocrossing reported a net income of USD 8.5 million on a topline of around USD 230 million in 2006. The price paid by Wipro is 13 per cent premium over the six-month average of Infocrossing’s stock value. Senapaty said this would be a one-time transaction and the tender offer would be announced later.
