Infy was supposed to buy them, but rumor mill spells Wipro as a bidder for Capgemini, France based consulting firm.
As per ToI:
“Wipro has been known to be open to inorganic growth. However, that the rumoured 60 a share price tag would be quite expensive, valuing the group at around 8 billion euros, but not impossible for Wipro.”
If at all the rumour is true, Capgemini will be a strategic acquisition for Wipro, as the latter needs to move up the value chain (cgey is a high-end consulting firm, while wipro is still a low-end, transactional oriented firm) and Wipro has been pretty open to inorganic ways to grow.
Asides, TechCrunch reported this deal as “Google’s Biggest App Distributor May Be Moving To India” – funny that these web2.0 guys can’t really think beyond the web avatar.
Technorati tags: cap gemini, wipro
I seriously doubt this is a good idea.
#1. Wipro’s Net Profit is 7.3 billion $ so looking at these number .paying 7 Billion Euro( not $) appears to be a calculated move . but there may be a hidden agenda that Premji wants to Hedge hte currency risk my moving payment to Euro . not sure how effective this deal would be to give him that negotiation power with Existing and new clients .
#2 we shouldn’t forget that its election time in US so there is a possible backlash if Wipro want to move from Dollar to Euro . Politicians are not biz guys . they are populist .
#3 There is always a Cultural issue in such Deals [Honeywell -GE,RJR-Nabisco, AoL -Time Warner] Integration will not be a cakewalk . attitude of CG folks will be very highhanded i guess . you can expect a mass exodus . with all due respect Premji is not known for being a peoples person [as in HR speak ] he still holds 70% + stocks of Wipro . its not considered good in West.
#4 Looking at the recent stock price drop in of ADOBE after Shantanu Narayen became CEO it seems West market is not very confident about Indian at Helm .
#5 How was Wipro-Spectramind deal ?
Although the news seems damn exhilarating for any Indian IT guy, I think Prashant has brought forth some excellent points. It will be interesting to see what happens if the rumor turns out to be true and better yet , Wipro ends up clinching the deal
If this happens – this will create a behemoth of the likes of IBM global services – which might be bad news. But I dont see this happening anyway. Premji has his purse too tightly closed!
-Su
http://bangalorebuzzz.blogspot.com
Suzanna – wondering why do you think its bad to have the likes of IBMs in India? Indian IT companies have to move up the value chain 0 from transactional based relationship to consultative selling. I am not too sure what’s the status of Infy’s consulting group (that was launched with some fanfare)..so Wipro has to go the inorganic route.
@Prashant – Great insights, as always!
Hi,please help me understand how can the takeover bid of a company of $6.8bn (Cap) MarketCap by a $20bn Marketcap company(WIPRO) be hostile. With profits running into 7bn, it seems natural for Wipro to be persistent and the see the deal through. Correct me in case.