India's number-three software exporter, Wipro (NYSE:WIT), will make a bid for France's Capgemini by the end of January in a deal that puts a $6.4 billion to $7 price tag on the company, the Hindustan Times reported Monday. Shares of Capgemini rose over 9% in Paris trading on the report. Investment advisors Citigroup (NYSE:C) and HSBC (HBC) have been frantically trying to finalize a plan for financing the deal before year-end. "Details about leveraged buyout financing and other options were discussed," a banker close to the deal said.
Wipro's bid for Europe's number-one computer consultancy firm could come in at about €48/share, the Times said. Shares closed at €40.71 on Friday. "We would not want to comment on market speculation. Of course, we are interested in larger deals and aggressively looking for inorganic growth options," Sudip Nandy, chief strategic officer of Wipro, said. There have been rumors of a possible bid by Wipro, or by larger rival Infosys (NYSE:INFY), for months.
Analysts say Capgemini would give Wipro a strong foothold in the consulting business. “Capgemini has a good presence in Europe and it would help Wipro to insulate itself from the weak dollar earnings,” said one analyst. Another expressed concerns about integration. Paris-based Capgemini has units in North America, northern, central and southern Europe, and Asia Pacific, as well as India. It boasts 75,000 employees.
A spokeswoman for Capgemini said Monday it has had no contact with Wipro. "For several weeks, there have been rumors that this or that Indian firm would want to bid for our company," she said in the name of a board member. "There are no talks going on of any kind with the Indian group being mentioned and we repeat our conviction that any hostile bid in the IT-sector is doomed to fail."
Shares of Wipro are up 3.65% in pre-market trading.
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