Infosys to buy automation tech firm Panaya for $200 mn
New Delhi: Betting big on new technologies to boost growth, country's second-largest software services firm Infosys will acquire US-based automation technology company Panaya for USD 200 million (over Rs 1,200 crore).
The all-cash deal is the second-largest acquisition for the Bangalore-based firm, after Swiss consulting company Lodestone, which it bought for about USD 350 million (Rs 1,932 crore) in 2012.
The move comes as part of Infosys' 'Renew and New' strategy to enhance competitiveness and productivity of current service lines by leveraging automation, innovation and artificial intelligence, Infosys said in a statement.
This is the first acquisition since former SAP Board member Vishal Sikka took as the CEO and Managing Director of the over USD 8 billion firm in August last year.
"The acquisition of Panaya is a key step in renewing and differentiating Infosys' service lines," Vishal Sikka said.
The transaction is expected to close before March 31, 2015, subject to customary closing conditions.
"This will help amplify the potential of our people, freeing us from the drudgery of many repetitive tasks, so we may focus more on the important, strategic challenges faced by our clients," Sikka said. Panaya's CloudQuality suite will allow Infosys to bring automation to its service lines through an agile software as a service (SaaS) model, help mitigate risk, reduce costs and shorten time to market for clients.
"The acquisition is positive for the company (Infosys) as it will enable better utilisation of the cash. While the exact numbers are not available, even the EV, the size of the company (Panaya) in terms of sales seems under USD 100 million," Angel Broking VP Research (IT) Sarabjit Kour Nangra said.
Talking about the deal, Greyhound Research Chief Analyst and Group CEO Sanchit Vir Gogia said the mid-size acquisition will bring onboard new IP for Infosys without any hassles and also prove easier and lighter for the teams to integrate.
"Panaya will offer significant differentiated advantage to Infosys for its Testing Services, which continues to be a manual process for many service providers," he added.
Infosys has been aggressively scouting for acquisitions as it looks to catch up with rivals like Tata Consultancy Services and HCL Technologies in terms of growth.
Sikka had said that the company is open to taking over innovative companies in areas like automation and artificial intelligence but is not interested in 'yesterdays' companies.
The company's shares were trading 0.36 per cent up at Rs 2,288.20 apiece during afternoon trade on the BSE. Panaya is a privately held company backed by hi-tech venture capital firms like Benchmark Capital, Hasso Plattner Ventures and Battery Ventures.
About 1,220 companies in 62 countries, including a third of the Fortune 500, use Panaya's CloudQuality Suite.
At the end of December 2014, Infosys had cash and cash equivalents of USD 5.65 billion (Rs 34,873 crore).
In January 2012, Infosys BPO acquired Portland Group, a strategic sourcing and category management services provider based in Australia, for USD 41 million.
In October of same year, it acquired Zurich-headquartered Lodestone Holding for a cash consideration of USD 219 million and an additional consideration of up to USD 112 million.--PTI