Infosys looks abroad for growth

Infosys buys Swiss business-consulting company Lodestone in an effort to build its global consulting and systems integration capabilities.

Indian consulting and technology company Infosys is planning to buy Lodestone, a privately held Swiss business-consulting company, at an enterprise value of $350 million.

Headquartered in Zurich, Lodestone advises international companies on strategy and process optimisation, and provides business transformation solutions enabled by SAP.

This is Infosys’s biggest acquisition to date and is part of its efforts to strengthen its consulting and systems integration capabilities, by bringing more than 850 employees, including 750 SAP consultants, to the company.

Lodestone will add more than 200 clients — across industries ranging from manufacturing and autos to life sciences — to Infosys’s existing pool of more than 700 clients. Infosys is expected to pay cash for the transaction and, post acquisition, the combined consulting practice focusing on SAP programs is expected to deliver more than $1 billion in revenues, which would clearly position Infosys among the global leaders in SAP consulting.

“A key plank of our Infosys 3.0 strategy is to expand our consulting and systems integration business,” said Sarojini Damodaran Shibulal, CEO of Infosys. “This acquisition fits perfectly into that strategy.”

Infosys’s consulting business currently has more than 30,000 consultants across 10 industries and accounts for 31% of the company’s revenue. The Lodestone acquisition will strengthen its global position, most notably in Europe, but also in Latin America and parts of Asia-Pacific. Infosys’s rivals include sector leader Tata Consultancy Services and Cognisant Technology Solutions, which earlier this year knocked Infosys out of the number two spot.

The transaction is expected to close by the end of October, subject to customary closing conditions.

UBS is acting as financial adviser to Lodestone. Linklaters is acting as legal adviser to Infosys and Baker & McKenzie is acting as legal adviser to Lodestone.

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