Infosys, according to a media report abroad, is eyeing UK-based information technology services provider Logica.
The Daily Mail reported that India’s second-largest Indian IT services provider might be preparing to bid for Logica for a whopping 2.9 billion pound (nearly Rs 18,500 crore).
“Whispers suggest the Reading-based IT services group is on Infosys Technologies’ shopping list. The Indian IT giant is said to be lining up a 2.9 billion pound or 180p a share cash offer for the company, which has a good public sector track record and apparently has some useful contacts within the new Conservative/LibDem coalition government.”
The news that Logica might be scouting for a buyer has been floating for a while. The names of prospective buyers had included Capgemini and Atos, too.
When asked, an Infosys spokesperson said: “We do not comment on speculation.” Highly-placed sources within the company say it had never scouted for such large acquisitions. For instance, a couple of years ago, Infosys was rumoured to be buying Capgemini, which was hotly denied. And in 2008, the company walked away from a $750-million bid for UK’s Axon Plc, when domestic rival HCL Technologies made a counter-bid.
Infosys has a cash pile of $3.5 billion (Rs 16,250 crore), a part of which could be deployed for acquisitions. But, analysts and sources within the company remain sceptical.
“Large acquisitions in Europe are always difficult because the labour laws are very rigid in most European countries. The laws hinder the acquirer to integrate the acquired company fully, since in most cases it requires some kind of downsizing of staff,” said a highly-placed company source, on condition of anonymity.
Logica executives could not be reached for comments.
It is understood that Infosys remains on the lookout for prospective targets in Europe, but those about a tenth of its size in terms of revenue.
Investment bankers, however, feel an acquisition in Europe by the company at this moment makes a lot of sense, as it’s difficult to penetrate into the continental Europe and Nordic region by pursuing an organic growth strategy. Europe contributes close to 26 per cent of Infosys’ total revenue, more than half from Britain alone (which contributes 14 per cent of total revenue).
