Infosys acquires European consultancy firm Lodestone for $350 million
Infosys, India's second largest software services exporter, has agreed to acquire global management consultancy firm Lodestone in an all-cash deal. Lodestone is a key player in the SAP domain and has in-depth experience of transformational change.
Infosys, which held on to $3.7 billion in cash at the end of June quarter, will pay CHF (Swiss francs) 330 million or $350 million for the deal. The transaction is expected to close by the end of October 2012, subject to customary closing conditions.
Upon completion, the acquisition of Lodestone will strengthen Infosys Consulting and Systems Integration (C&SI) capabilities, by bringing more than 850 employees, including 750 experienced SAP consultants to the company, Infosys said in a statement. The acquisition will also add more than 200 clients across industries, including manufacturing, automotive and life sciences, to the Infosys pool of over 700 clients.
The Lodestone acquisition will also significantly enhance Infosys' global presence, particularly in continental Europe and emerging markets like Latin America and Asia Pacific.
"A key plank of our Infosys 3.0 strategy is to expand our C&SI. This acquisition fits perfectly into that strategy. Lodestone and Infosys share a culture of unwavering focus on nurturing and maintaining client trust," Infosys CEO and Managing Director S D Shibulal said.
Headquartered in Zurich, Lodestone advises international companies on strategy and process optimization, and provides business transformation solutions enabled by SAP's enterprise solutions. Lodestone clocked revenues of $210 million in 2011. Of this, 50 per cent was from Switzerland and 23 per cent from Germany.
Post-acquisition, the combined consulting practice focusing on SAP programs will deliver revenues of more than $1 billion, the statement added. Infosys Consulting & Systems Integration business today has more than 30,000 consultants across 10 industry verticals and accounts for 31 per cent of the company's revenue.
"Clearly it is consistent with what the company (Infosys) has been talking about. It's good news as far as Infosys shareholders are concerned. The markets wanted the company to do something with the large cash they had on their books," Bhavin Shah of Equirus securities said.
Shares in Infosys jumped over 1 per cent in early trade. At 09.15 a.m., the stock traded 1.1 per cent higher at Rs. 2,523.40, outperforming the BSE IT index, which traded with 0.34 per cent gains.
Linklaters LLP is acting as the legal advisor to Infosys, while UBS AG is acting as financial advisor and Baker & McKenzie acted as legal advisor to Lodestone.
