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Infy entices Aussies with first buy

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CIOL Bureau
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BANGALORE: Infosys Technologies Ltd, India's largest listed software exporter, announced its first acquisition on Thursday, saying it will pay $22.9 million for an Australian company with telecoms expertise.



Expert Information Services Pty Ltd employs 330 people and has 40 clients, mainly from the telecoms sector.



"There is some special expertise that people of Expert bring to the table, specifically in the area of telecom and that's something we don't have today," Infosys Chairman N.R. Narayana Murthy told a news conference in Bangalore.



The all-cash acquisition comes after Infosys bagged a five-year contract to develop software for Australia's largest telecom group, Telstra Corp Ltd.



Infosys has been criticized for holding back on acquisitions despite raising funds on the Nasdaq in 1999, becoming the first Indian firm to list on a U.S. market. The company is sitting on a cash chest of about $470 million.



Wipro Ltd, India's third-largest software exporter, has stolen a march by using its cash reserves to seal a string of acquisitions in the past two years.



Fuelled by global ambitions and a rebounding economy, Indian companies, mainly from the pharmaceutical, automotive and software sectors, have been on an overseas acquisition spree in the past few months.



Infosys's shares rose as much as 3.5 percent to 5,300 rupees after the news, but trimmed gains to 5,148 rupees by the afternoon, up 0.51 percent in line with the benchmark index.



"This deal doesn't do much to improve Infosys's stock valuation except helping it gain a bigger foothold in the Australian market, which would have otherwise taken a longer time," said Amit Khurana, analyst at Birla Sun Life Securities.



The 10-year-old Expert posted a net profit of $5.2 million on revenue of $34.6 million in the year to June.



Infosys has a branch office in Australia that employs 73 people, including 19 permanently based in the country. The company earned $10.3 million in revenue from its Australian operations in the year to March, under two percent of its total revenue. It employed 20,000 people at the end of September.



"Infosys's own operations combined with the service capabilities of Expert would enable us to become a premium player in the growing Australian market," said Nandan Nilekani, Infosys's managing director.



Reuters

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