Wipro acquires US firm Infocrossing

21 August, 2007:

Wipro Limited, India’s third-largest software company, is acquiring the United States-based information technology (IT) infrastructure management company Infocrossing at a price of $600 million.

The acquisition would be conducted through tender offer for outstanding shares of Infocrossing, which is based in New Jersey, followed by a merger of Infocrossing with a Wipro subsidiary.

Wipro Limited, based in Bangalore, has agreed to acquire Infocrossing for $18.70 a share in cash, the largest acquisition by an Indian technology company.

Suresh Vaswani, president of Global IT Service-lines of Wipro, said, “Wipro Technologies has identified global infrastructure services as an important driver of growth for the company and is pleased to add Infocrossing, which provides integrated managed infrastructure services to premier global clients.”

Infocrossing hopes to boost profit margins as it gets access to larger contracts and sends more work back to low-cost India.

For the 12 months ended March 31, 2007, Infocrossing recorded revenues of $232.4 million and a net income of $9.3 million.

The acquisition is expected to be completed by the third quarter of 2007.

About the deal with Wipro Limited, Zach Lonstein, chairman and chief executive officer of Infocrossing said, “We selected Wipro after conducting a full process and believe that, by coupling our strong services and United States-based operations with the global delivery model of Wipro Technologies, we will be able to drive additional value for the shareholders and clients of both our companies.”

Infocrossing Incorporated is a Nasdaq-listed IT infrastructure enterprise application and business process outsourcing company. It has five data centers in the United States, employing 900 people.

Wipro Limited, which has 640 customers, and larger rivals Tata Consultancy Services Limited, and Infosys Technologies Limited, have been buying software services companies overseas to increase the range of their products and win clients.

Buying a competitor in the United States, the main market for India’s software services industry, also allows Indian companies to be nearer their customers.

The combined annual sales of Wipro and Infocrossing are expected to touch $1 billion in 24 to 36 months, according to K R Lakshmi Narayana, chief financial officer at Wipro’s IT business.