Wipro to acquire cellent AG for $78 million

Wipro has agreed to acquire German IT consulting and software services firm cellent AG from Landesbank Baden-Wuerttemberg for $73.5 million euros (Rs 520 crore), as the Bengalurubased IT services company looks to speed up growth in continental Europe. “This acquisition will provide Wipro with (Q,N,C,F)* significant scale and prime customer relationships, especially in the Manufacturing and Automotive domains, which are key industry sectors in the DACH region”. For the calendar year 2014, the company clocked revenue of €87 million.

Cellent’s clients include marquee auto 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.

The 13-year old German company Cellent is headquartered in Stuttgart in Germany and has operations in 11 locations in Germany, Austria and Switzerland.

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.

With assigning overweight rating, Morgan Stanley says this acquisition is unlikely to contribute meaningfully to revenue or earnings. It is expected to generate synergistic benefits from cross selling opportunities for Wipro’s services, it feels. “By joining the Wipro family, we will be able to leverage Wipro’s vast services portfolio and its worldwide network to meet our customers’ requirements end-to-end”.

The brokerage maintained “buy” rating on the stock with a price target of Rs 719, an upside of 24.44 per cent against Wednesday’s closing price of Rs 577.75.

At 09:22 hours IST, the scrip of Wipro was quoting at Rs 583.85, up Rs 6.10, or 1.06 percent on the BSE.