The Hindu Business Line : Satyam pursuing four acquisition opportunities

The Hyderabad based company has identified about four potential targets for acquisition, Satyam`s Chief Strategy Officer, Mr Shailesh F. Shah, told Business Line on the sidelines of the ‘IT Services & BPO connect’ event, held recently in Mumbai.

All four acquisitions that the company is chasing are in the over $50 million range.

“We started talking to these companies around two months ago. In these kinds of opportunities, it takes about 6-9 months to close the overall transaction,” Mr Shah said.

The company is currently talking to both IT as well as BPO companies. However,

Mr Shah did not disclose which gaps in service offerings Satyam would like to fill through a buy.

Areas of interest

Mr Harit Shah, IT Analyst with Angel Broking, said that Satyam would want strengthen its tentacles in the engineering services outsourcing and the remote infrastructure management space through acquisitions.

“Both these areas are touted to be future growth engines for IT companies. Currently Satyam’s presence (in these areas) is not as sizeable as the company would want it to be,” he said.

Another industry official said, on the condition of anonymity, that one of the acquisitions will surely be in the consulting space.

Since 2005, Satyam has acquired four consulting companies.

Satyam is currently sitting on cash reserves of more than Rs 6,400 crore, which could be effectively deployed for future inorganic growth play, which has been an integral part of the growth strategy of Indian IT companies.

The stage for acquisitions appears to have been set last week with the country’s second largest IT firm Infosys announcing its $753 million or Rs 3,238 crore acquisition of UK-based Axon group.

Attractive valuations

Moreover, valuations in the IT sector have headed southwards due to the recessionary trends across the globe; this has made acquisitions much more cheaper compared to 2006.

However, this slowdown has resulted in some sections of the market doubting the ability of IT companies to live up to their promises of headcount addition, at least for this fiscal.

On being asked whether Satyam would be able to live up to its promise of hiring 12,000-15,000 employess this fiscal, Mr Shah said: “We want to hire that number of people this fiscal. However, we are cautious about whether we will be able to do it or not.”

However, he feels that the current slowdown is not even a scratch on what the world saw in 2000-01.

Related Stories:
Satyam pursuing 20 large deals
Satyam Q1 net up 45 pc

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page