With the announcement of Infocrossing's acquisition for around $410mn ($18.70/share for 22.10 mn shares outstanding), Wipro (NYSE : WIT) has heralded a new era of big acquisitions.
Investors will be eager to see how this acquisition helps the bottom line of the company. Infocrossing's net worth as of Mar-31/2007 was $127 mn (with $157mn in goodwill) and its market cap as of Aug 7 was $400mn.
Revenues for 2006,2005 and 2004 were $229mn, $148mn, $104mn. Operating income during this period was $25mn, $10mn and $12mn, and net income was $8mn,$2.5mn and $19mn. Interest expense for Infocrossing was $25mn for 2006 and Income tax expense of $6.8mn(35% tax rate).
With the assumption of 20% return on investment , over four years Wipro should generate $400mn of cash from this new company, recouping the investment.