Infosys Technologies, India's second-biggest software-maker, dismissed as "speculation" media reports on Friday that it will bid for Paris-based consultancy Capgemini, a firm with more than three times its annual sales.
Bangalore-based Infosys will use cash reserves amounting to Rs 62 billion ($ 1.5 bn) to fund the takeover bid for Capgemini, the Times of India reported, citing industry sources and people close to the matter.
Infosys will be able to reinforce its business in Europe by buying Capgemini; it will help build key relationships for its IT business. Still, Capgemini may be "too big" for Infosys to buy.The European consultancy had $ 10.35 billion in annual sales last year, compared with Infosys' $ 3.1 billion. But Capgemini made half the profit logged by Infosys and commanded less than half its market value of $ 27 billion dollars. The planned takeover of Capgemini is in line with a declared policy "to strike at the right target at the right time and the right place," The Times of India quoted sources close to the matter as saying.
The report comes less than three months after Infosys shuffled key management positions, promoting chief executive Nandan Nilekani to chairman and setting him free from day-to-day operations to map growth strategies. Chief operating officer Kris Gopalakrishnan was named chief executive. The company, a pioneer of the outsourcing boom in India's software industry, is preparing for greater competition amid rising wages and a strengthening rupee that is denting export earnings.
(source: Economic Times)
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