Infosys says $500 m-plus buys possible
Infosys’s CEO Kris Gopalakrishnan says that his firm is ready for an acquisition that would cost $500 mn or even more, but rules out hostile buyouts, reports Narayanan Madhavan.business Updated: Oct 30, 2007 23:41 IST
Software major Infosys’s Chief Executive Officer Kris Gopalakrishnan said on Tuesday that his company was ready for an acquisition that would cost $500 million or even more, but ruled out hostile buyouts.
“Given Infosys’s size, 500 is do-able. It does not mean something smaller or larger won’t happen,” Gopalakrishnan told reporters during a visit to the capital.
The biggest acquisition made by Infosys until now is a complex deal involving Philips, in which a multi-year contract value was blended with takeover of the Dutch electronics giant’s business process outsourcing (BPO) facilities and 1,400 workers. That deal was pegged at an estimated $250 million but the actual payout for the facilities cost only $28 million.
Wipro announced this year India’s biggest overseas buyout, when it moved to acquire Nasdaq-listed Infocrossing for $600 million.
Gopalakrishnan said Infosys looked to bridge service skill gaps or map an entry into a key geographical area through its acquisitions and also ensure that employees of the acquired company would stay back. Besides, the valuation factor would be critical, he said.
The cash chest of about $1.5 billion that Infosys has can be used for quick deployment in the case of an acquisition, and also is in line with its founders philosophy of avoiding debt, Gopalakrishnan said.
The company sees more business opportunities from the ongoing integration of Royal Bank of Scotland and ABN Amro, after an RBN-led consortium successfully bid to acquire the Dutch group. Both RBS and ABN Amro are key customers for Infosys and offer scope in an age in which technology integration is vital for success in financial services.
Gopalakrishnan said his company was in the race for about 15 international deals involving revenues of more than $100 million, but large deals could take eight to 12 months to achieve closure, he said.