Bloomberg.com
India's Wipro to Buy Infocrossing for $600 Million (Update3)
By Jay Shankar and Shailendra Bhatnagar
Aug. 6 (Bloomberg) -- Wipro Ltd., India's third-largest software company, will acquire U.S.-based Infocrossing Inc., which provides information technology outsourcing, for $600 million to add customers and widen the services on offer.
Wipro, based in the southern Indian city of Bangalore, plans to merge New Jersey-based Infocrossing with a U.S. unit, the company said in a filing to the National Stock Exchange in Mumbai. The proposed takeover is the largest ever by an Indian technology company, according to data compiled by Bloomberg.
``Wipro will deepen presence in the main market with this transaction,'' said Vinod Bansal, director at Veni Madhav Securities, some of whose clients own Wipro shares. ``The buyout price is not at a substantial premium, so it is unlikely that the market will take it negatively.''
Wipro and larger rivals Tata Consultancy Services Ltd. and Infosys Technologies Ltd. have been buying software services companies overseas to bolster their menu of offerings and also acquire new clients. Buying a competitor in the U.S., the main market for India's software services industry, allows companies to be nearer to their customers.
The combined business is expected to touch $1 billion in 24 to 36 months, K.R. Lakshmi Narayana, chief financial officer at Wipro's IT business, told reporters in Bangalore today. Infocrossing has five data centers and 900 workers based in the U.S., and has a ``strong'' presence in the health care and infrastructure management services, Wipro said.
All-cash transaction
The all-cash transaction is likely to be completed by the third quarter of the fiscal year ending March 31, 2008, Suresh Senapaty, Wipro's chief financial officer, said.
Wipro will pay $18.70 a share for Infocrossing, a 5.5 percent premium to Friday's closing price. Infocrossing rose 41 cents, or 2.3 percent, to $18.14 on the Nasdaq.
Infocrossing reported a net income of $1.8 million on revenue of $59.2 million for the first quarter ended March 31, the company said on its Web site. Infocrossing has customers such as Sunoco Inc., the largest oil refiner in the U.S. Northeast, and Swiss drugmaker Novartis AG.
Shares of Wipro fell 12.4 rupees, or 2.6 percent, to 457.85 rupees on the Bombay Stock Exchange today. The announcement was made after the markets closed.
Wipro was advised by Citigroup and the adviser for Infocrossing was Credit Suisse Securities.
To contact the reporters on this story: Jay Shankar in Bangalore at jshankar1 at bloomberg.net ; Shailendra Bhatnagar in New Delhi at sbhatnagar3 at bloomberg.net . Last Updated: August 6, 2007 11:47 EDT
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