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Infosys to buy Simplus in its second-biggest acquisition
Photo Credit: Reuters

Infosys Ltd has agreed to acquire Outbox Systems Inc., a US-based company that operates under the Simplus brand, to beef up its cloud consulting and digital transformation offerings.

The company will pay $200 million (Rs 1,425 crore) for the acquisition, including contingent consideration subject to closing adjustments, India’s second-largest software services exporter said in a stock-exchange filing.

Infosys will also pay up to $50 million in employee incentives and retention payments on meeting certain performance conditions over three years.

This is the second-biggest acquisition by Infosys, after its $350-million purchase of Zurich-based Lodestone Holding AG in 2012.

The Simplus transaction trumps the $200-million acquisition of US-based automation technology firm Panaya Inc in 2015. The company had sealed the Panaya deal under then chief executive Vishal Sikka. After Sikka’s departure in 2017, Infosys had put Panaya on the block but later changed its mind.

Bengaluru-based Infosys, like bigger rival Tata Consultancy Services Ltd, has traditionally shied away from making large acquisitions. Instead, it has struck a handful of deals in the $70-150 million range and invested in a bunch of startups through the Infosys Innovation Fund to ramp up its skills in new technologies such as cloud computing. Its other main local rivals, Wipro Ltd and HCL Technologies Ltd, have made comparatively bigger acquisitions.

Simplus was established in 2014 and is majority-owned by its founders and key employees, with Salesforce Ventures holding a minority stake. It has offices across North America, Sydney, Melbourne, London, and a delivery centre in Manila. It brings expertise in Salesforce’s cloud-based software, industry knowledge and a broad base of clientele across industries including high-tech, financial services, retail, healthcare, life sciences and manufacturing.

“This acquisition is key to staying relevant to the digital priorities of our clients and demonstrates our commitment to the Salesforce ecosystem,” said Pravin Rao, chief operating officer at Infosys.

Infosys also said that the acquisition of Simplus, coupled with the takeover of Fluido announced in September 2018, will strengthen its position as an end-to-end Salesforce enterprise cloud solutions and services provider.

The Indian company had agreed to acquire Finnish company Fluido for €65 million (about $76 million) to strengthen its enterprise cloud capabilities and presence in Europe. Like Simplus, Fluido was also majority-owned by its management team, with a private equity firm and Salesforce Ventures also holding a minority stake.

Simplus co-founder and CEO Ryan Westwood said the acquisition would help the Salt Lake City-based company to accelerate growth.

The acquisition is likely to close in the current quarter, subject to customary closing conditions.

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