Wednesday, April 16

IT-ITeS sees decline in cross-border M&A deals in Jan-March

New Delhi: The IT and ITeS sector witnessed in the January-March quarter a sharp decline in cross-border merger and acquisition (M&A) deals involving Indian companies. The sector saw deals worth over $287 million in the quarter, against $596 million in the same quarter in 2007, says a report by Grant Thornton, reported The Economic Times.

During this period, the IT-ITeS sector witnessed 23 cross border deals, the same as the corresponding quarter of the previous year. These include IT services firm Mascon Global's $55 million acquisition of two U.S. based companies- Jass & Associates and SDG, Mastek's acquisition of enterprise solutions firm Systems Task Group International for $29 million and AurionPro's acquisition of Sena Systems, all of which were struck in March.

Other acquisitions during the quarter were HCL Technologies' $40 million acquisition of banking software firm Capital Stream, Satyam Computer Services' $35-million buyout of consulting firm Bridge Strategy Group and Mindtech's $21 million purchase of Infotech Consulting.

Analysts say companies are delaying deal closures to figure out the impact on their businesses as well as in the hope for better valuations. "Companies are not taking decisions for two reasons. One, they're hoping for valuations to get even better as valuations have take a beating globally. The other reason is that they are still evaluating how much their businesses are going to be affected by the crisis in the U.S.," said CG Srividya, partner - corporate advisory services, Grant Thornton India.

Last year, the noted deals in the same quarter included Subex's $164.5 million acquisition of Canadian firm Syndesis, HOV Services' $148 million buyout of BPO Lason and Teledata Informatics' acquisition of eSys Technologies for $105 million. In the same quarter, enterprise solutions major Oracle acquired i-flex for an undisclosed sum With Indian IT majors starting to report their annual results and guidance for the fiscal 2008-09 from Tuesday, greater clarity is expected to emerge about the impact of the slowdown in the U.S. on the Indian IT-ITeS sector.

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