The Hindu Business Line : Atos Origin keen on buys

Mumbai, Feb. 13 Atos Origin, the €5.8-billion Europe-based software services and BPO company , on Wednesday said that it is eager to make an acquisition in India. It may be recalled that the industry has recently witnessed acquisitions by US and Europe-based firms, namely EDS acquiring Mphasis-BFL; CapGemini, another European company acquiring Kanbay which has a significant employee base in India; and CSC acquiring Covansys which, again, has an India development base.

Speaking to Business Line, Mr Hubert Tardieu, Executive Vice-President at Atos, said “We are interested in companies that have a high proportion of revenues coming from fixed price projects and those with a good Europe presence.” Asked if he weren’t narrowing down his options since many Indian companies do not have a big portion of revenues coming from fixed price projects, he said, “That may be so, but that is what clients want. And that is what I want, to be able to service my client requirements.”

Mr Tardieu also predicted that one or both of two things would happen in the next 18 months. “One of the large Indian companies would acquire a pretty large European company; and, a large European company would buy a mid-sized Indian company.”

Price expectations

According to Mr Jean-Pascal Dragon, Group V-P, Global Sourcing, the company has been trying to acquire an Indian entity, but that the valuations that Indian promoters expect does not match with Atos’ estimate of the target company. “Promoters want a price that is unreasonable.” Asked if most promoters want to stay long term and hence are unwilling to sell out, he said, “(Some of them) are dreaming about unreachable market capitalisation.” However, it is looking more keenly at Indian companies now that market capitalisation of most companies has dropped.

Asked what Atos Origin would like in a target company, Mr Dragon said, with a specific emphasis on the first IF, “If we (could choose), we would look at companies that reinforce our skills like those in SAP, we would also look for a geographic fit, and possibly verticals such as telecom and finance, from which contributions to total revenues are relatively less.”

Asked why Atos would look at a company with European presence since Atos itself is active there, Mr Tardieu said, “It is easier to (integrate) a company which understands the specifics of the European market.” He added that it would be ideal if the target company had 40 per cent of work done in Europe and 60 per cent in India.” He added that he would expect the target company to have “a few thousands” of employees.

With the stock market slowing down a bit, Atos sees an opportunity to acquire. Said Mr Dragon, “What was unaffordable last year, is beginning to look affordable this year.”

Atos Origin currently has about 2,500 people in India, and without taking acquisitions into account, that number would grow to 6,000 by the end of 2009.

More Stories on : Outsourcing | Mergers & Acquisitions | Software

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