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Wipro buying healthcare IT/BPO firm for $460M; shares lower (updated)

Feb. 11, 2016 9:33 AM ETWipro Limited (WIT) StockBy: Eric Jhonsa, SA News Editor
  • Wipro (NYSE:WIT -2.8%) is buying HealthPlan Services, a provider of BPO and Web-based exchange services for the U.S. health insurance industry, for $460M in cash. The deal is expected to close in the next 60-90 days.
  • Wipro: "In the highly competitive Exchange market, payers rely on HealthPlan Services innovative and robust offering to acquire, service and retain members. Payers also leverage the analytical and predictive engines of HealthPlan Services to better serve their members. Today, HealthPlan Services connects its payer clients to over 40 public exchanges and over 150 private exchanges in the U.S."
  • The company also suggests the Affordable Care Act (i.e. Obamacare) is contributing to HealthPlan's growth, declares HealthPlan provides "synergies with Wipro's presence in the Managed Medicare and Commercial Group Insurance markets," and calls the purchase "closely aligned with Wipros key levers for growth, which are to dominate the services market through industry utilities that multiple customers can use."
  • The deal follows one to buy German IT services firm cellent AG for $78M. Rival Cognizant bought healthcare IT firm TriZetto for $2.7B in 2014. Wipro is lower on a morning the Nasdaq is down 1.2% and the S&P 1.1%.
  • Update: Likely weighing on Wipro: Morgan Stanley has downgraded to Equal Weight.

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