In continuation of a string of pearls acquisition strategy, Wipro has said the Promax acquisition would help them growing their presence in the analytics segment, which has been identified as a key growth area for the company. Since 1993, Wipro has carried out 30 acquisitions, excluding this one.
The acquisition is expected to be completed in this quarter and the new entity will be called Wipro Promax Analytics Solutions.
Avendus Capital acted as the exclusive financial advisor to Wipro on this transaction. Wipro's share price on the BSE closed at R405.10 down 0.32% on Monday, with the company announcing the acquisition after the close of market hours.
Wipro's chief strategy officer Rishad Premji said the company's acquisitions are driven by strategic needs than any price point. "We will be looking at more acquisitions in France and Germany," he added.
The acquisition of Promax Applications Group will strengthen Wipros positioning and capability in management, analytics & optimization of trade promotions," said K R Sanjiv, senior vice president and global head, analytics and information management, Wipro.
As per industry estimates, consumer-focused companies spend 12 to 25% of their gross annual sales on trade promotions. Organisations are increasingly leveraging analytics to enhance effectiveness and maximize the return on investment (ROI) of their spend on trade promotions.
Promax Applications Group CEO Don Nicol said, PAG will help Wipro to differentiate its offerings in the trade and marketing management space through an added value proposition.
Commenting on the acquisition, Jagannadham Thunuguntla, Strategist & Head of Research, SMC Global Securities said, The size of the deal doesn't show that it will be a game changer for Wipro currently. But, Kurien has stated several times that analytics is important for the company, so with this acquisition Wipro is trying to test the waters and prepare itself for a bigger game in the analytics space. The deal is not much about client acquisition but more about talent acquisition and relevant exposure in the analytics space. It will help preparing the company to enter new geographies and focus on analytics vertical.
Wipro's last acquisition was in April, 2011, when it picked up a portion of the IT business of US based Science Applications International Corporation (SAIC) for $150 million. Prior to that, it acquired Citigroup's subsidiary, Citi Technology Services (CTS) formerly called Citos for $127 million in December 2008.
Wipro has been the most active among the Indian IT services firms as far as acquisitions is concerned. It has been following the strategy of taking smaller firms into its fold with key focus on gaining deeper technologies as well as several mid-sized firms. The largest acquisition made by Wipro was in the infrastructure outsourcing space of Infocrossing for $700 million in the United States. Prior to that it made several smaller acquisitions in the range of $20-50 million of firms such as NewLogic, Saraware, Cmango etc.