Wipro Technologies on Friday announced the acquisition of US-based Science Applications International Corporation (SAIC)?s global oil and gas information technology practice for $150 million. The all-cash deal will boost the firm?s energy, natural resources and utilities business unit and guide the ?upstream? revenue mix of the unit from 5% currently to 17.5%.
Post the acquisition, the business unit would form 11% of Wipro?s overall revenue pie. Wipro would also acquire ?significant? domain capability, executives said.
The oil and gas IT practice provides consulting, system integration and outsourcing services to global oil majors and has domain capabilities in the areas of Digital Oil Field, Petro-technical Data Management and Petroleum Application Services addressing the upstream segment. In the oil and gas industry, upstream involves exploration and production while downstream includes retail and distribution. The upstream market is expected to touch $19 billion by 2013 with many oil companies looking at rationalizing cost through IT.
Company executives said that SAIC?s oil and gas IT practice had annual revenues of $188 million. Although EBIT would be dilutive now, margins would be in line with Wipro?s IT services business in two years time, CFO Manish Dugar said. The buy is EPS accretive from the outset.
The firm has 10 customers and 1450 employees, all of whom are expected to transition to Wipro across North America, Europe, India and West Asia.
?The acquisition of SAIC?s Global Oil & Gas Information Technology practice will strengthen Wipro?s existing Energy business unit in becoming a long term strategic partner in our customer?s transformation journey. We are happy to have the SAIC team on board. Their domain consultancy and competencies significantly enhances Wipro?s capabilities in the upstream oil & gas space and further strengthens Wipro?s position as an end to end leader in servicing customers,? said Anand Padmanabhan, senior vice president, Energy, Natural Resources and Utilities SBU, Wipro Technologies.
The firm said that completion of the acquisition was subject to customary closing conditions and regulatory approvals.
