Infosys To Acquire Simplus In $250 Million Deal
Infosys Ltd. said that it will acquire Simplus, a leading Salesforce consulting and advisory firm in the U.S. and Australia, in an up to $250 million deal.
The deal size is “$200 million including contingent consideration to be paid for the acquisition of shares subject to closing adjustments”, according to the Bengaluru-based company’s exchange filing.
In addition, there are employee incentives and retention payments amounting up to $50 million on meeting certain performance conditions over three years, it added.
Simplus is majority-owned by the institutional investors, founders and key employees, with Salesforce Ventures having a minority stake. Its revenue stood at $67.1 million for the fiscal year ending Jan. 31.
This acquisition, coupled with the acquisition of Fluido announced in September 2018, further elevates Infosys’ position as an end-to-end Salesforce enterprise cloud solutions and services provider, offering clients unparalleled capabilities for cloud-first digital transformation.Infosys Statement
The acquisition will bring to Infosys the globally recognised Salesforce expertise, industry knowledge, solution assets, deep ecosystem relationships and a broad clientele across industries including high-tech, financial services, retail, healthcare, life sciences and manufacturing, it added.
The acquisition is expected to close during the fourth quarter of the current financial year, subject to customary closing conditions.
This acquisition is key to staying relevant to the digital priorities of our clients and demonstrates our commitment to the Salesforce ecosystem.Pravin Rao, Chief Operating Officer, Infosys
Simplus has offices across North America, Sydney, Melbourne, London, and a large delivery centre in Manila.
“We have viewed this partnership from a culture-first lens from the beginning, and we believe that the alignment of our company values, and the preservation of our company DNA will allow us to accelerate growth,” Ryan Westwood, CEO and co-founder of Simplus, said.
According to Prabhudas Lilladher, while the acquisition is not very large, it may have some impact on Infosys numbers. The acquisition is valued at 3.7x enterprise value-to-sales FY20, a bit on the higher side, the brokerage said in a note to clients. “Simplus has a revenue base of $67 million in FY20, growing at ~60 percent year-on-year. Assuming 45 percent year-on-year growth in FY21E, this acquisition accounts to 0.7 percent of Infosys’ revenues.”
The acquisition, according to Emkay Global Financial Services, may be revenue-accretive by ~50 basis points for Infosys in FY21E.