The New Year could signal the beginning of big-ticket cross-border acquisitions for Indian firms. While it appears certain that the Tatas would emerge as the preferred bidder for Ford's iconic Land Rover and Jaguar brands, software major Wipro could become a strong contender to take over French consulting firm Capgemini.
Wipro is expected to place a bid to acquire Capgemini by January-end next year, according to investment banking sources. The bid could be close to Euro 48 per share, valuing Capgemini at $6.4-7 billion.
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Mega plans
• Bankers have been negotiating with Wipro's senior management on strategies for financing the deal
• Citigroup and HSBC executives have been in discussions with the Wipro management to finalise the gameplan
• Analysts say raising funds could turn out to be difficult since the US financial markets are still reeling under the sub-prime crisis |
Talk about Wipro’s interest in the French company has been in the air for sometime now and the buzz is becoming louder since the software giant has been seen to be making some strategic moves in that direction. Bankers have been holding hectic negotiations with Wipro’s senior management on strategies for financing the deal.
Executives from Citigroup and HSBC have been in discussions with the company's management to finalise a game-plan before the long-holidays begin after Christmas, according to sources. However, this could not be independently verified by either Citigroup or HSBC.
“Details about leveraged buyout (LBO) financing and other options were discussed,”said a banker close to the transaction. Raising funds could turn out to be difficult since the US financial markets are still reeling under the sub-prime crisis, analysts said.
Sudip Nandy, chief strategic officer of Wipro, said: “We would not want to comment on market speculation. Of course, we are interested in larger deals and aggressively looking for inorganic growth options.”
In August, Wipro bought US-based business process outsourcing services provider Infocrossing for approximately $600 million (Rs 2,400 crore). Capgemini spokesperson Christel Lerouge said the company would not comment on market speculation.
Analyst say that Wipro would get a strong foothold in the consulting business if it manages to take over Capgemini. “Capgemini has a good presence in Europe and it would help Wipro to insulate itself from the weak dollar earnings,” said a Mumbai-based analyst. “Integration would be a problem,”said an industry source.
Paris-based Capgemini has operations in North America, northern Europe & Asia Pacific and central & southern Europe. The company, with 75,000 employees, is also active in the Indian market where it is mainly engaged in information technology, management consulting and professional services.