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Will teh smelly frogs try to block this takeover too?
Infosys Rumored To Eye Bid For Capgemini
Ruth David, 06.29.07, 3:57 AM ET
MUMBAI - They’re both denying it, but the markets are abuzz with rumors that Indian software giant Infosys will attempt to acquire a controlling stake in European tech consultancy Capgemini.
Reports of Infosys’ interest pushed Capgemini’s shares up 3.7% to close at 53.78 euros ($73.21) on the Paris Stock Exchange on Thursday. By mid-morning Friday, Infosys shares were trading up 1.12% on the Bombay Stock Exchange at 1,947.50 rupees ($47.79).
An Infosys spokesperson in Bangalore dismissed the reports as speculation. Capgemini also declined to comment to the press.
Capgemini would be a mouthful for Infosys. It is Europe’s largest computer services company, with a $10 billion market cap and three times the sales of Infosys.
If such a deal happens, it would make strategic sense for Bangalore-based Infosys, which doesn’t have a strong consulting outfit, and is looking to plug that gap, said a Mumbai-based tech analyst who declined to be named. With roughly 60 billion rupees ($1.47 billion) on its balance sheet and the ability to raise cash easily, funds aren’t an issue either.
Infosys management has said in the past that they’re looking at acquisitions as a means to break into new markets. And Europe, with its high growth rates and the advantage of a currency that is strong against the rupee, unlike the dollar, is a region that Indian tech firms are eager to tap into.
“The chances of this being true in the near-term are low given that Infosys is focused on financial profitability. By acquiring such a company, the payback period could be on the higher side,” says Trideep Bhattacharya, head of Asian IT Services Research at UBS Securities. But he added that Infosys has the resources and is on the lookout for acquisitions.
Capgemini stepped up its presence in the Indian market last October, when it acquired the U.S.-headquartered, India-focused tech firm Kanbay for $1.25 billion. Paris-based Capgemini posted losses from 2002 through 2004; its return to profitability involved outsourcing jobs to India and China. Its acquisition of Kanbay is expected to add 23,000 jobs in India by 2010.
Indian tech firms have among the highest growth rates in the world, with the domestic industry expanding 30% in the year to March 31, while global tech services grew about 6%. However, the majority of Indian tech companies’ revenues come from the U.S., and with the rupee gaining about 9% against the dollar since January, they are looking to diversify their businesses to other regions.
Ruth David, 06.29.07, 3:57 AM ET
MUMBAI - They’re both denying it, but the markets are abuzz with rumors that Indian software giant Infosys will attempt to acquire a controlling stake in European tech consultancy Capgemini.
Reports of Infosys’ interest pushed Capgemini’s shares up 3.7% to close at 53.78 euros ($73.21) on the Paris Stock Exchange on Thursday. By mid-morning Friday, Infosys shares were trading up 1.12% on the Bombay Stock Exchange at 1,947.50 rupees ($47.79).
An Infosys spokesperson in Bangalore dismissed the reports as speculation. Capgemini also declined to comment to the press.
Capgemini would be a mouthful for Infosys. It is Europe’s largest computer services company, with a $10 billion market cap and three times the sales of Infosys.
If such a deal happens, it would make strategic sense for Bangalore-based Infosys, which doesn’t have a strong consulting outfit, and is looking to plug that gap, said a Mumbai-based tech analyst who declined to be named. With roughly 60 billion rupees ($1.47 billion) on its balance sheet and the ability to raise cash easily, funds aren’t an issue either.
Infosys management has said in the past that they’re looking at acquisitions as a means to break into new markets. And Europe, with its high growth rates and the advantage of a currency that is strong against the rupee, unlike the dollar, is a region that Indian tech firms are eager to tap into.
“The chances of this being true in the near-term are low given that Infosys is focused on financial profitability. By acquiring such a company, the payback period could be on the higher side,” says Trideep Bhattacharya, head of Asian IT Services Research at UBS Securities. But he added that Infosys has the resources and is on the lookout for acquisitions.
Capgemini stepped up its presence in the Indian market last October, when it acquired the U.S.-headquartered, India-focused tech firm Kanbay for $1.25 billion. Paris-based Capgemini posted losses from 2002 through 2004; its return to profitability involved outsourcing jobs to India and China. Its acquisition of Kanbay is expected to add 23,000 jobs in India by 2010.
Indian tech firms have among the highest growth rates in the world, with the domestic industry expanding 30% in the year to March 31, while global tech services grew about 6%. However, the majority of Indian tech companies’ revenues come from the U.S., and with the rupee gaining about 9% against the dollar since January, they are looking to diversify their businesses to other regions.
Stupidly, I was looking at Arcelor.
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