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  1. Infosys’ move to acquire Fluido positive, retain ‘Buy’

Infosys’ move to acquire Fluido positive, retain ‘Buy’

Infosys has signed a definitive agreement to acquire Fluido, a Salesforce advisor and consulting partner in Nordics.

By: | New Delhi | Published: September 20, 2018 2:52 AM
Infosys will pay EUR 65 million (m) for the acquisition including earn-out, management incentives and bonuses. Infosys has not disclosed financials of Fluido.

Infosys has signed a definitive agreement to acquire Fluido, a Salesforce advisor and consulting partner in Nordics. The acquisition will strengthen Infosys’ partnership with Salesforce and enhance its cloud transformation capabilities in Nordics. Infosys will pay EUR 65 million ($75m) for the acquisition including earn-out, management incentives and bonuses. Infosys has not disclosed financials of Fluido.

We believe the new management’s strategic roadmap has inorganic initiatives as the key to fill the gap and strengthen capabilities. This is the second acquisition in FY19 after WONGDOODY. We see the recent acquisitions as positive for Infosys fortifying its capabilities in digital and cloud. Retain ‘Buy’.

The acquisition will expand Infosys’ capabilities in key geographies like Finland (Espoo), Denmark (Copenhagen), Sweden (Gothenburg), Norway (Oslo) and Slovakia (Banská Bystrica) for services in Salesforce. Fluido, founded in 2010, already led the implementation with 300 clients. The company would add 200 professionals specialising in Salesforce and cloud capabilities. Fluido has raised $3.6 million in its latest funding round in January 2016 from Salesforce Ventures and Norvestia Growth Equity. Fluido is majority-owned by the management team and CapMan private equity, with Salesforce Ventures having a minority stake.

Infosys has not disclosed the financial details of Fluido. However, our check suggests that the company has revenue of $11.5 m with margin in high single digit. We see the deal to have limited impact on earnings in FY19-20. Valued at EV/Sales of 6.5x and EV/EBITDA of 72x, the deal was signed in September 2018 and expected to close by Q3FY19. Every cloud subscription sold is accompanied by other products and services. This can include additional cloud subscriptions for storage or security, additional software for cloud services management or add-on analytics or even hardware or networking especially for private cloud computing implementations.These additional products and services mean the ecosystem that surrounds Salesforce implementations is larger than Salesforce itself.

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