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 Acquisitions
 

The second quarter of FY 2003-04 witnessed a spate of acquisitions in the Indian IT and ITeS space. This time around there was more action in the ITeS space which saw many major players entering into multi million dollar cross border acquisitions to improve upon their geographic spread and to gain entry into niche verticals. This is a sign of maturing of the industry that's in keeping with the consolidation in the industry that we have seen earlier this year. However the key event for the quarter was GE offloading 60% of its stake in GECIS to private equity firms General Atlantic Partners and Oak Hill Capital Partners. Deal Beat looks at some of the prominent deals that took place in the quarter:

 

GE sells stake in GECIS

General Electric (GE) has offloaded 60 per cent stake in its wholly-owned BPO Company GE Capital International Services (GECIS) for $500 million to private equity firms General Atlantic Partners and Oak Hill Capital Partners. The deal is expected to be completed in six months. GECIS employs about 17,000 people in centers located in India, China, Hungary and Mexico. Revenues in 2004 are expected to reach $420 million. The deal values GECIS at between 1.5 and 2-times its 2003 revenues, which is comparable to IBM's acquisition in April of Daksh Services, India 's third-largest BPO player, for $145 million.

 

Scandent buys out Aon arm

In one of the biggest cross-border acquisitions in the BPO sector, the Scandent Group has entered into an agreement with US-based Aon Corporation to buy a majority stake in its claims processing subsidiary, Cambridge Integrated Services Group for around $110 million. Post acquisition, Aon will retain a minority financial interest in Cambridge . Scandent's subsidiary ProcessMind will be folded into Cambridge to expand the company's BPO capabilities.

 

OfficeTiger acquires UK-based Devonshire

(BPO) major OfficeTiger, which has operations in Chennai, has acquired UK-based Devonshire Group for an undisclosed sum. Devonshire Group is a provider and consultant of outsourced creative, document and staffing solutions to professional service firms in the UK and Europe. The acquisition, it is believed will complement Office Tiger's existing capabilities in document solutions, at the same time enable OfficeTiger to leverage Devonshire 's client list.

 

Hinduja TMT buys Source One

Hinduja TMT has signed an agreement with Georgeson shareholder Communications, Inc to acquire 100% of Source One Communications Inc USA (SOC) in an all cash deal of approximately $ 8.5 million funded entirely through internal accruals. Source One has its operations in USA, Canada, and Philippines.

 

ICICI One Source acquires Accounts Solutions Group

Marking its entry into the collections space in a big way, ICICI One Source has completed the acquisition of New York based consumer collections agency, Account Solutions Group. ASG specializes in third party debt collections and its clients include three of the Top 10 credit card issuers in the United States. ASG currently operates two centers in, New York and has over 500 employees. Its revenues for the year ended December 31st 2003 stood at $25.14 million.

 

ICICI One Source acquires 51 % stake in Pipal Research

ICICI OneSource Ltd acquired a 51 per cent stake in Pipal Research, an Illinois, USA incorporated firm specializing in providing high-end customised business research, analytics and information services. This move is a part of ICICI One Source's plans to broaden its service portfolio and to pursue aggressive growth in this strategic market segment.

 

Aviva invests in EXL

Aviva has picked up minority stake in EXL Services for $12.5 million. While either of the companies declined to reveal details of the deal, it is believed that EXL has been valued at $250 million, implying a
5 percent stake for Aviva in the company.

 

Aztec software acquires Disha Technologies

Aztec Software and Technology Services Ltd acquired Disha Technologies, a software product-testing firm in a $12.1-million stock and cash deal. This move will enable Aztec to strengthen its service offerings by foraying into the testing services space.

 

Shipara becomes 100% subsidiary of HCL

HCL Technologies acquired the balance 23 per cent stake in Shipara Technologies, thus making the Bangalore-based company its wholly owned subsidiary. Shipara Technologies focuses on high-end engineering and technology areas such as aerospace, embedded systems, engineering services and communication technologies.

 

MindTree buys ASAP Solutions

MindTree Consulting acquired the Noida-based ASAP Solutions, a niche SAP consulting firm for an undisclosed sum in an all cash deal. ASAP Solutions focuses on implementation of SAP, maintenance, and application integration. The addition of ASAP's 120 strong team will expand MindTree's capability in the ERP segment. Prior to this acquisition, MindTree had a 50-member SAP implementation team.
 

Patni Acquires Cymbal

Patni has acquired US-based Cymbal Corporation. For about $68m in cash, through its wholly-owned subsidiary in the US. The acquisition opens up a presence in the telecom vertical to Patni.

 

 Talisma acquires eAssist

Talisma, a provider of multi-channel CRM solutions, acquired eAssist, a global provider of customer service, support, and marketing software. Talisma will incorporate eAssist's technology, intellectual property, and customer base into its operations.

 

Valtech acquires Majoris

French technology consulting firm Valtech has acquired Bangalore-based Majoris Systems for e8.4 million. Post acquisition Majoris will be merged with Valtech India to form a common offshore delivery centre. Valtech said that it would pay a base price of 4.8 million euros in cash for Majoris. The agreement also includes a three year earn-out that could add up to e3.6 million to the transaction price.

 

Cognizant acquires Ygyan Consulting

Cognizant Technology Solutions acquired Ygyan Consulting, a Pune, India-based SAP services provider. Ygyan has been a SAP services partner since 2000, and was also recently selected as a channel partner of SAP India for the mySAP All-in-One solutions.
 

Trianz Consulting acquires Eximsoft

Privately-held US IT consulting firm Trianz Consulting has acquired acquired Eximsoft. Trianz, which has a 60 people team at its development centre in Bangalore will integrate the assets and 140 strong team of Eximsoft, which has expertise in product development, for executing consulting projects for its clients.

 

Four Soft acquires CargoMate

Four Soft Ltd has acquired Netherlands based Transportation and Logistics solutions provider CargoMate for a transaction value approximately USD 1.90 million. Post acquisition the company will be renamed as Four Soft BV a 100 per cent subsidiary of Four Soft.

 

US firm buys out CashTech Solutions

CashTech Solutions India Pvt Ltd, a cash management solutions provider, has been acquired by US-based Fundtech Ltd for $3.3 million in cash, plus another $3.7 million over a three-year period dependant on performance. Under the terms of the agreement, the Nasdaq-listed Fundtech will pay $3.3 million in cash and an additional amount of up to $3.7 million in cash over three years, contingent upon the financial performance of CashTech.
 

Concerto acquires Rockwell FirstPoint Contact

Concerto Software, a provider of contact centre solutions, has acquired Rockwell FirstPoint Contact from Rockwell Automation. Concerto Software holds 66.7 per cent of the market share for Outbound Contact Center Systems in India. The deal will significantly expand the geographic reach of Concerto.

 

MphasiS buys out MsourceE

MphasiS BFL has bought out the minority shareholders' 30.86 per cent stake of in MsourcE for Rs 187 crore. The target company was valued at $149 million (or Rs 700 crore), which is 2.2 times its estimated revenues for fiscal 2005 or 3.7 times its last fiscal's revenues.

 Global Acquisitions
 

IBM Acquires Maersk Data

In a close to $1 Billion deal Denmark 's dominant industrial combine, the A.P. Moeller/ Maersk Group has sold its IT branch named ‘Maersk Data' to the American IT giant IBM. When adding Maersk Data's annual turnover of DKK 3.4 Billion and its 2,850 employees to its own DKK 7.0 Billion turnover and 4,000 staff members, IBM Denmark will fortify its position as Denmark 's leading IT company and stands every chance of becoming the logistics and transport sectors' preferred IT supplier.

 

Convergys Acquires Finali

Convergys acquired Finali, a privately held firm that provides business process engineering services to contact centers, for US$25 million in cash. The Finali's acquisition is believed to strategically compliment Convergys position in the $130 billion in-house contact center market.
 

LexisNexis acquires Seisint

LexisNexis U.S., a leading provider of legal, news and business information services, acquired Seisint, Inc., a U.S.-based provider of information management products and services, for $775 million. Seisint will become part of the LexisNexis U.S. Risk Management business of the Corporate and Federal Markets division.

 

Symbol Technologies acquires Matrics, Inc.

Symbol Technologies, Inc. acquired of Matrics, Inc., a leader in EPC compliant Radio Frequency Identification (RFID) systems in a $230 million all cash deal. The addition of Matrics' end-to-end RFID system into Symbol Technologies' enterprise mobility architecture it is believed will help enable Symbol Technologies to take EPC-based RFID solutions from today's point products to scalable networked solutions.

 

Cisco snags Procket

Cisco Systems acquired the intellectual property, a majority of the engineering team and select assets from privately-held Procket Networks for approximately $89 million in cash. Procket, a start-up based in Milpitas, California, is a developer of concurrent services routers and has expertise in silicon and software development. The deal will add a rich intellectual property portfolio and a team of proven silicon and software architects to Cisco's industry leading routing technology and products.

 New customer orders
 

Newgen bags Airtel order

Newgen Software Technologies it has bagged a Rs 70 lakh order from Airtel for document management solutions. Newgen has deployed its document management solutions in six circles of Airtel - UP East, Rajasthan, Jammu & Kashmir, West Bengal , Bihar and Orissa, The system would allow Airtel to reduce response time to its customer queries.

 

TCS Bags SEBI Contract

Tata Consultancy Services Ltd (TCS) has won a IT upgradation contract from the Securities and Exchange Board of India (SEBI). The plan envisages upgradation of the market regulator's software and hardware infrastructure at a cost of a little less than Rs 10 crore. As per the upgradation plan, SEBI wants to have a paperless office where there will be no movement of paper and all the files will move electronically from one department to another.

 

ESS bags contract with Alam Group of Uganda

ERP solutions provider Eastern Software Systems (ESS) bagged a Rs one crore order from Uganda-based Alam Group of Companies to integrate and automate its manufacturing software.

 

Hexaware Bags Maintenance Contract From Lufthansa

Hexaware Technologies, has bagged a contract from German company Lufthansa Systems for providing maintenance services over a period of three years. With this contract Hexaware has become the largest offshore partner of Lufthansa systems, the wholly-owned information technology (IT) subsidiary of Germany 's Lufthansa group. The deal is aimed at maintenance of Lufthansa System's mainframe-based applications like ticketing, check-in and inventory.

 

Cognizant wins deal from Wallenius Wilhelmsen

Cognizant bagged a one-year services agreement to provide IT infrastructure management for Wallenius Wilhelmsen, a global specialist in ocean, inland and supply chain management, which operates over 60 modern vessels and 600 vehicle transporters across five continents.

 

Boeing ties up with IBM

Boeing Co. and International Business Machines Corp. plan to develop advanced information technologies for the Defence Department and intelligence systems under a ten-year partnership.

 And deals that did not go well…
 

JP Morgan scraps deal with IBM

IBM lost one of its high profile IT outsourcing contract as
J.P. Morgan Chase & Co. cancelled the remainder of a seven-year, $5 billion contract that the two companies signed in late 2002. This move by JP Morgan comes on a decision by the company to make full use of the IT assets and processes that the company acquired through its merger with Bank One.

 

Sainsbury's overhauls $3 billion Accenture deal

UK supermarket giant Sainsbury's Plc is renegotiating its $3 billion business transformation outsourcing project with Accenture following a swathe of IT-related problems. The Business Transformation Programme, it is believed failed to realize many of the anticipated performance improvements and cost benefits for Sainsbury's.