How Much Will Infosys Spend in Europe?
Indian computer-services providers Infosys (NASDAQ:INFY) is planning another acquisition bid in Europe and is willing to spend $500 million on a single buy. The Bangalore-based company is hoping to increase sales from the European market soon and will likely target organizations that own intellectual property.
In 2008, Infosys was going to buy the U.K.-based Axon Group for 407 million pounds ($644 million), but its offer was trumped by New Delhi-based competitor HCL Technologies Ltd and Infosys decided to pull out. Now armed with $4 billion in cash piles, Infosys looks ready to make a second go at European expansion.
“We do have cash, but we are looking for a company which adds to our capability and becomes complementary to our growth rather than becoming a laggard,” Chandrashekar Kakal, the company’s global head of business IT services, told Bloomberg.
Infosys builds software programs and provides back-office support to clients such as U.K. phone company BT Group (NYSE:BT) and oil company BP (NYSE:BP). It has profited by the outsourcing of jobs from the U.S. over the last decade, but is now turning its attention to Europe as businesses there look to cut costs. The company is hoping to earn 40 percent of its sales from the region, up from the current 22 percent.
Infosys had bought Citigroup’s (NYSE:C) stake in Progeon Ltd., a back-office service provider, for $115 million in 2006 and now controls the company. In addition to its forthcoming big purchase, it may also make other smaller buys worth about $30 million to $50 million each, Kakal said, but declined to name potential targets.
The company has been expanding in France and Germany by employing 20 percent local consultants in the region instead of English-speaking ones.
However, the company’s stock has declined 14 percent this year and Infosys is currently valued at 1.36 trillion rupees ($26.4 billion). It also missed fourth-quarter sales forecasts.