Deal Beat

Volume 13 - March 2007

Significant Mergers & Acquisitions in 2006
BPO	IT Services	IT Products

BPO

RR Donelley acquires OfficeTiger for $250 m

In March 2006, US-based $8 billion document outsourcing firm RR Donnelley acquired Chennai based Office Tiger BPO for $250 million, in an all cash deal. The deal ramped up RRD's headcount to 6,000 in India. Office Tiger's brand name and management were to remain the same. The deal would make the new entity one of the largest document based outsourcing firms in the world.

TransWorks acquires Minacs for $125 million

In June 2006 TransWorks took over Canada's largest outsourcing firm Minacs(with 6,000 employees) for a consideration of USD 125 million. The companies together would have revenue of USD 300 million.

Capgemini acquires majority stake in Unilever's Finance & Accounting platform in India

In September 2006 Capgemini extended its Finance and Accounting Business Process Outsourcing (BPO F&A) capabilities by acquiring from Hindustan Lever Limited a 51% shareholding in Unilever India Shared Services Limited (Indigo). The partnership with Unilever was expected to reinforce Capgemini’s market–leading position in BPO F&A services, employee services, procurement and knowledge process outsourcing and add significant capabilities to Capgemini around innovative services such as corporate financial compliance and control.

ClientLogic Buys Sitel for $450 Million

In October 2006 US based ClientLogic acquired customer service provider Sitel for US$4.05 per share in cash, or a total of $450 million. The combined entity would have revenues of $1.7 billion and offer clients options for onshore, near shore and offshore customer care solutions in over 145 facilities across the world.

Hinduja TMT buys US BPO co AFFINA

In October 2006 Hinduja TMT acquired a US-based BPO company, AFFINA, as part of its move to grow the BPO business and substantially expand the number of employees. The acquisition was expected to strengthen the company’s presence in the US.

IT Services

Wipro buys European co Enabler for $52 m

In June 2006 Wipro Technologies acquired European IT solutions provider for the retail sector Enabler in an all cash deal exceeding $52 million (41 million). The buy-out was expected to bring about skills in retail package implementation and consulting to Wipro . The deal would help Wipro expand its footprint in Europe.

EDS India merged with Mphasis

In July 2006 Mphasis BFL announced that it would merge the operations of EDS India with itself. EDS had earlier acquired about 52 per cent stake in MphasiS for over $380 million. The combined entity would help achieve an optimal business model in India and and also enhance the service offering to clients.

Cognizant acquires US co AimNet

In September 2006, Cognizant acquired the Massachusetts-based AimNet Solutions, a managed infrastructure and professional services firm in a $15 million deal. In acquiring AimNet, Cognizant gained capabilities in the IT infrastructure services practice. Founded in 2000 by former AT&T executives, AimNet is a privately-held company with over 100 employees.

Capgemini buys Kanbay for US$ 1.25 billion

In October 2006 Kanbay a Nasdaq-listed, $400-m company became part of global services company Capgemini. The acquisition of Kanbay was expected to significantly enhances CapGemini’s global financial services practice in North America and India. It also gives Capgemini capabilities in consumer and industrial products, telecommunications, media, life sciences and the travel & leisure verticals.

Hexaware buys FocusFrame

In December 2006, Hexaware completed the acquisition of FocusFrame Inc, a US-based testing consulting firm in an all cash deal for $34.3 million. FocusFrame's partnership with Mercury and SAP opens huge new opportunities for Hexaware.

Tata Consultancy Services acquired Total Communication Solutions for$ 1.7 million cash

In November 2006, Tata Consultancy Services acquired TCS Management (formerly called Total Communication Solutions) for A$ 1.7 million cash, plus performance payments for a total consideration of A$ 15 million over 5 years.

TCSM is privately owned and had a total turnover of AUD $5.5M for the financial year ended June 30, 2006. Local knowledge and domain consulting expertise brought by TCSM was expected to complement TCS' global capabilities in consulting, IT services and BPO to provide greater value to TCS’ Australian business.

IT Products

Subex buys Azure Solutions for $140 million

In April 2006 Subex Systems acquired Azure Systems (UK), a company larger than itself (Azure had a turnover of $ 31million against Subex's revenues of $26 million). The merger created the world’s largest vendor of fraud-prevention software aimed at the telecom industry with a client base that included 23 of the world’s 40 largest telecom operators around the world.

Oracle Acquired Stellent for $440 Million

In December 2006 , Oracle acquired Stellent, a global provider of enterprise content management (ECM) software solutions. The acquisition of Stellent was expected to complement and extend Oracle's existing content management solution portfolio.

IBM acquired Filenet for $1.6 B

IBM’s acquired FileNet,a leading provider of business process and content management solutions, in August 2006. Customers were expected to benefit from the combined capabilities of both companies – from ensuring content is delivered and utilized in context of their business processes to achieving effective compliance, archiving and document retention.

HP buys Mercury Interactive for $4.5 billion

In July 2006, HP acquired Mercury Interactive for $4.5 billion. The addition of Mercury was expected to increase the size of HP's software business to more than $2 billion in annual revenue. The move combined HP's OpenView systems, network and IT service management software with Mercury's capabilities in application management, application delivery, IT governance and SOA governance.

Google buys Youtube for $1.65 billion

In October 2006, Google carried out their biggest acquisition ever on purchase of Youtube. Google’s intended to cash in on YouTube, which had caught the fancy of netizens with its video-sharing concept.