Infosys BPO to acquire US co McCamish for initial $38 mn

IT bellwether Infosys Technologies on Thursday said its subsidiary Infosys BPO will acquire US-based McCamish Systems for an initial payment of $38 million (about Rs 176.6 crore).

Infosys BPO has signed a definitive agreement to acquire all the outstanding interests of McCamish Systems LLC, Infosys Tech said in a filing to the Bombay Stock Exchange.

"The upfront consideration for the deal is $38 million, with up to an additional $20 million payable to the sellers if McCamish Systems achieves certain financial targets in the future," the company added.

The acquisition is expected to be completed later this year.

"We look forward to this combination with McCamish, and welcome an exceptional group of professionals with strong skill sets to the Infosys family who will enrich our service capabilities in the USA," Infosys BPO CEO & MD Amitabh Chaudhry said.

The acquisitions is expected to enhance Infosys' capability to provide complete business solutions for insurance and financial industries.

"Infosys BPO has in-depth knowledge of the insurance and financial services sector, and this deal reinforces our relationship position in providing business platform services," Chaudhry said.

The combination is likely to enable McCamish to serve larger portfolio of transactions for clients and expand into global markets.

Shares of Infosys Technologies were trading at Rs 2,336 on the BSE, up 1.18 per cent from its previous close.

Google to Buy Admob for $750 Million

Google is to pay $750 million to buy AdMob, a provider of advertising on mobile phones, the internet search leader announced Monday.

The deal is the third largest ever undertaken by Google and underscores the company's strategy of extending its online advertising dominance to the mobile web, where its Android smartphone operating system is becoming increasingly popular. Google said it expected antitrust regulatory review in the U.S. but not in Europe.

AdMob has a system that serves display ads on mobile phones and its purchase could give the still nascent market a powerful boost, analysts said.

"Google could have built this itself, but this gives them a head start," says mobile analyst Greg Sterling of Sterling Market Intelligence. "It will thrust Google into the forefront of mobile display ads."

"AdMob is a great Silicon Valley story," said Google in a blog posting to announce the deal. "We are looking forward to having them join the Google team and work with us on the future of mobile advertising."

Cisco to acquire Tandberg

Oslo (Norway): Cisco Systems will acquire Norway's video conferencing equipment maker Tandberg ASA for $3 billion (17.2 billion Norwegian crowns) in cash, the companies informed on Thursday.

"Tandberg's board of directors have unanimously decided to recommend its shareholders to accept the offer," informed Tandberg.

The analysts had different opinions about the offer price, as some stated it fair while others said that it was too low. "This sounds like a pretty good price so I would think it will end up there. But the bid will stand for four weeks and there might be other offers," said Martin Hoff, Analyst, Arctic Securities.

"The probability for a competing bid was low, but not impossible. From an industrial perspective, this is right for the company," said Espen Torgersen, Analyst, Carnegie. He also added that the price was "highly acceptable".

Tandberg's share price rose up to 12.8 percent to a high of 156 Norwegian crowns before getting back to 154 Norwegian crowns. The shares of Cisco trading in Frankfurt were one percent lower at $23.28 (15.98 euros).

Cisco Systems informed that Fredrik Halvorsen, Chief Executive Officer, Tandberg would continue to lead the unit.

IT BPO Mergers and Acquisitions go Slow

The pace of IT and BPO companies merging is slowing down. The reason for this is simple, at one point in time during December to February the morale and business confidence was its lowest and valuations had come down to multi year lows. However since february the markets have now again reverted and regained the lost ground.

This has resulted in valuations going up and hence mergers and acquisitions at these levels are risky.

Bangalore: In 2009, it seems that IT and BPO companies have stayed away from blockbuster merger and acquisition (M&A) deals. According to the data tracked by Grant Thornton, an accounting and consulting firm; against the total deals value of $1.3 billion in January-July 2008, the M&A space grossed only $616 million this year.

While the Tech Mahindra-Satyam deal bolstered the domestic numbers, the total value of cross-border deals (outbound and inbound combined) fell 83 percent to $156.5 million during January-July this year. The cross-border deal volume at 13 deals was a fraction of last year's level (47 deals).

A total of 16 PE transactions in the IT and BPO space grossed $108.6 million in January-July 2009, compared with 39 deals that yielded $258.3 million in the corresponding period last year. S Mahalingam, CFO and Executive Director, Tata Consultancy Services said, "The subdued level of M&A activity underlined the industry's thinking that given the tough environment, the focus should be on driving the day-to-day business."

According to Nasscom, India's IT and BPO industry is expected to clock an export revenue growth rate of 4-7 percent in the financial year (FY) 2010, substantially lower than the 16.3 percent recorded in FY 2009. Harish H V, Partner - Grant Thornton India said, "The entire mood in the industry had been weak due to the slowdown in key export markets. M&A was not on the top of the mind for most players. Although we expect the activity to pick-up in the coming months, the full-year numbers will still be lower than last year."

Mumbai: Even as troubles in the financial services and automotive sectors globally continue to worry India's IT service companies, Infosys Technologies is focusing on smaller acquisitions in the healthcare space.

"We are looking at small acquisitions, of the range of $100-200 million, as managing a large acquired entity would be tough in today's circumstances. We are looking at firms that offer services to healthcare companies," V Balakrishnan, chief financial officer (CFO) of Infosys, the country's second-largest IT services firm, told DNA.

Infosys is also evaluating firms in the consulting space, where it lost out to HCL Tech in the race to acquire UK-based SAP consulting firm Axon Plc in August.
However, an analyst, who did not wish to be named, said Infosys is unlikely to make a deal in the consulting space.

"Acquisition in the consulting arena would generally be of large ticket sizes, upwards of $500 million. Moreover, for a firm of the size of Infosys, a lot of synergy would happen by having a bigger consulting firm with capabilities in multiple domains," the analyst said.

Infosys has begun evaluating firms in France and Germany. Besides, Balakrishnan said the company is evaluating firms in Japan with an aim of getting a stronger foothold in the 'closed Japanese market'.

The Japanese market for IT services is estimated at $108 billion.

Amongst the top IT firms in India, Infosys have been the most conservative as far as acquisitions are concerned. In 2003, it acquired an Australian firm, Expert Information Technologies, for about $24 million. Four years later, it acquired Philips' global BPO operations. Infosys' cash reserve stood at about Rs 8,450 crore at the end of Q3 (Oct-Nov-Dec) 2008. For the year to March 2009, Infosys has forecast revenues of between $4.72 billion and $4.81 billion in dollar terms and Rs 21,309 crore and Rs 21,731 crore in rupee terms.

Infosys Acquisition in Healthcare

Mumbai: Even as troubles in the financial services and automotive sectors globally continue to worry India's IT service companies, Infosys Technologies is focusing on smaller acquisitions in the healthcare space.

"We are looking at small acquisitions, of the range of $100-200 million, as managing a large acquired entity would be tough in today's circumstances. We are looking at firms that offer services to healthcare companies," V Balakrishnan, chief financial officer (CFO) of Infosys, the country's second-largest IT services firm, told DNA.

Infosys is also evaluating firms in the consulting space, where it lost out to HCL Tech in the race to acquire UK-based SAP consulting firm Axon Plc in August.
However, an analyst, who did not wish to be named, said Infosys is unlikely to make a deal in the consulting space.

"Acquisition in the consulting arena would generally be of large ticket sizes, upwards of $500 million. Moreover, for a firm of the size of Infosys, a lot of synergy would happen by having a bigger consulting firm with capabilities in multiple domains," the analyst said.

Infosys has begun evaluating firms in France and Germany. Besides, Balakrishnan said the company is evaluating firms in Japan with an aim of getting a stronger foothold in the 'closed Japanese market'.

The Japanese market for IT services is estimated at $108 billion.

Amongst the top IT firms in India, Infosys have been the most conservative as far as acquisitions are concerned. In 2003, it acquired an Australian firm, Expert Information Technologies, for about $24 million. Four years later, it acquired Philips' global BPO operations. Infosys' cash reserve stood at about Rs 8,450 crore at the end of Q3 (Oct-Nov-Dec) 2008. For the year to March 2009, Infosys has forecast revenues of between $4.72 billion and $4.81 billion in dollar terms and Rs 21,309 crore and Rs 21,731 crore in rupee terms.