Indian Economy News

Wipro buys German firm Cellent for US$ 78 mn

Bengaluru: Wipro Ltd has bought Cellent AG, a German technology company that implements and maintains SAP (systems applications and products) software for clients in automobile and manufacturing segments, for $78 million.

The purchase is the latest move by India’s third largest software firm to scale up its business in the DACH or Germany, Austria and Switzerland region of western Europe.

Cellent AG reported $92 million in revenue last year.

This is Bengaluru-based Wipro’s second purchase in the regions this year—it bought Denmark-based Designit for $95 million in July to strengthen its presence in the digital space.

“Cultural synergies and locational proximity are key to building successful customer relationships. Cellent is a well-established player with marquee customers, a well-known brand and has strong local talent. cellent will significantly boost our footprint in the DACH region, especially in the manufacturing and automotive domains,” said N.S. Bala, chief executive, manufacturing and hi-tech vertical at Wipro.

Cellent’s clients include marquee car maker Daimler AG and lens maker Carl Zeiss AG, and SAP is a business software used to run basic functions in finance, human resources and manufacturing.

Wipro bought cellent from its parent firm, German bank Landesbank Baden-Wuerttemberg.

Wipro will also see Cellent’s more than 800 consultants join the firm even as it expects to close the acquisition by the fourth quarter of 2015-16.

Some experts called the buyout a “catch up” move as the company tries to keep up with larger rivals Tata Consultancy Services Ltd and Infosys Ltd.

“At a time where the industry is obsessed with intelligent automation and the journey towards the as-a-service economy, the suggested deal appears to be decidedly traditional,” said Thomas Reuner, managing director of IT outsourcing firm HfS Research. “Traditional in a sense that the deal logic appears to be about access to clients and about capabilities that are more focused on systems of record rather than engagement.”

Many buyouts by homegrown information technology firms this year are in the SAP space. Earlier this year, Infosys paid $200 million to buy automation technology provider Panaya, which helps the company avoid deploying an army of engineers to perform manual repetitive tasks like upgrading enterprise resource planning software.

Mid-tier Bengaluru-based software exporter Mindtree paid £42.3 million to buy UK-based Bluefin Solutions, which helps migrate SAP-installed software, like ERP (enterprise resource planning), to the cloud.

Wipro’s 8,000-strong manufacturing and hi-tech segment is the second largest industry vertical, behind banking and finance, and accounted for 18.3% of the company’s $7.1 billion revenue for the year ended March 2015. Clients based out of Europe brought about 26.3% of the company’s total business.

Wipro has moved to offer more solutions for clients in the manufacturing space, who now bring in about $750 million in revenue, while clients in the hi-tech space account for the remaining $550 million in business. In comparison, at the start of 2011, clients in the hi-tech space accounted for nearly $700 million of Wipro’s revenue.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.