Wipro buys U.S based Quantech

By agencies   |   Tuesday, 16 May 2006, 07:00 Hrs
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BANGALORE: The global IT services division of Wipro has signed a definitive agreement to acquire U.S based mechanical design services firm, Quantech in an all cash deal.

This acquisition comes barely five months after Wipro acquired Austria based semiconductor design company, NewLogic for $56 million.

While Wipro would pay an upfront cash of about $10 million for a 100 percent stake, the deal size could well exceed the value of NewLogic deal as the current transaction also includes earn-outs on achieving certain financial targets over a three year period.

Sudip Nandy, chief strategy officer of Wipro Technologies said that the percentage of Quantech's earn outs would be in the "mid single digits" (of total revenues) per year and over a period of three years. Quantech registered revenues of $ 12.7 million in 2005 and has grown at 15 percent CAGR for the last eight quarters.

By this yardstick, the current acquisition, at the end of three years, could easily be Wipro's second biggest buyout after Spectramind.

Mukesh Gandhi, CEO of Quantech will head the combined entity. Presently, Wipro has close to 100 people on its Product Life Cycle practice in the CAD/CAM space.

With this acquisition, it expects CAD/CAM to account for 10 percent of its product engineering business in the next three years.

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