Wipro buys out US co for $600 million
Wipro Technologies has signed a definitive agreement to acquire the Nasdaq listed Infocrossing for $18.70 per share pegging the enterprise valuation of the IT infrastructure management services firm at $600 million including $60 million dept in all cash deal. This marks Wipro’s 12th acquisition in the IT space and the ninth in the last 24 months.
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 the US - Wipro Inc. This buyout brings in a revenue of $232.4 million with 900 people spread accross five locations in the US. Wipro Technologies, for the first time, is going to a acquire a publicity held company.
Wipro CFO Suresh Senapaty said that acquisition was a perfect fit for their technology infrastructure services (TOS) and gave them an undisputed lead in remote infrastructure management services. The current global IT infrastructure market is estimated to be about $150 billion and about $70 billion is projected as offshorable.
However, the operating margines of Infocrossing, which ranges between 10% and 14% does not exactly match up to the Wipro Technologies’ margin of about 25%. But, Mr.Senapty said, there are lot of synergies between the companies and the margin difference will be mitigated in the next 2-3 years time.
It may be mentioned that Infocrossing reported a net of $8.5 million on a topline of around $230 million in 2006. The price being paid by Wipro Technologies is 13% premium over the six month average of Infocrossing’s stock value. Mr.Senapty said this would be a one-time transaction and the tender offer would be announced later.
