Infosys to buy Swiss consulting firm Lodestone for Rs1,900 crore
10 Sep 2012
Infosys Ltd, India's second-largest software services exporter today said it is buying Swiss management consulting firm Lodestone Holding AG in a deal valued at 330 million Swiss francs ($349 million), in order to expand its consulting and systems integration (C&SI) business.
In its biggest overseas acquisition (over Rs1,900 crore), the Bangalore-based company will add more than 750 consultants and 200 customers in industries including manufacturing, automotive and life sciences.
Although sitting on an Rs20,600 crore ($3.7 billion) cash pile, Infosys has not made any acquisition in Europe. After trying to buy UK's Axon Group Plc in 2008 for $651 million, Infosys abandoned the deal after it was outbid by HCL Technologies Ltd.
When ICICI Bank non-executive chairman KV Kamath took over as the first non-promoter chairman of Infosys in August 2011, analysts had widely speculated that he would push Infosys on the path of acquisitions.
The Lodestone acquisition is widely seen as bearing Kamath's efforts as he has been nudging the company's top leadership to use the huge cash pile for expansion through acquisitions rather than going through the slow pace of organic growth, ever since he took over (See: Kamath prods Infosys to make large acquisitions).
Consequently, in May chief financial officer V Balakrishnan, said ''The $4 billion cash, which we have, we might look at utilising these for overseas acquisitions. This could be mainly Europe, and we might also look at other global destinations.''
Balakrishnan, however qualified, ''But this it has to be the right company, right price… .''
Zurich-based Lodestone advises international companies on strategy and process optimisation, and provides business transformation solutions enabled via cloud computing.
Acquiring a company in Europe will help the Indian firm increase its presence, add a local sales force and new lines of businesses.
