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Infosys to buy US firm Kaleidoscope in second acquisition of 2020
Photo Credit: Reuters

Infosys Ltd said Thursday it has signed a pact to acquire Kaleidoscope Animations Inc., an Ohio, US-based company that designs and develops medical devices as well as consumer and industrial products.

Infosys will pay up to $42 million (Rs 308 crore) to Kaleidoscope’s founders, India’s second-largest software services company said in a statement. The amount includes earn-out payments, management incentives and bonuses.

The deal value is about twice Kaleidoscope’s revenue of $20.6 million for the year through December 2019. The design firm posted revenue for $15.5 million for 2018 and $13.2 million the year before.

The US company, which operates as Kaleidoscope Innovation, designs microsurgical instruments, devices used in minimally invasive surgery, drug delivery devices for ophthalmic therapies and user-centric wearables. It also offers product design, research, engineering and other services to clients in the healthcare and industrial sectors.

“This acquisition strengthens our digital offerings at the intersection of new software technologies and medical devices—a sector that is expected to witness significant investments and consumerization in the post-COVID era,” said Ravi Kumar, president at Infosys.

Kumar added that Infosys’s clients will benefit from Kaleidoscope’s strong upstream offerings of product innovation and design, and the Indian IT firm’s stack of product engineering, validation and commercialisation services.

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

Bengaluru-based Infosys has struck many takeover deals over the past few years to ramp up its skills in areas such as cloud computing, design engineering and digital transformation. Most of Infosys’s acquisitions have been in the $70-150 million range, though it has also struck a couple of larger deals.

In February, for instance, Infosys agreed to acquire Outbox Systems Inc., a US-based cloud services company that operates under the Simplus brand, for up to $250 million. That was the first acquisition by Infosys in 2020 and second-biggest overall, after its $350-million purchase of Zurich-based Lodestone Holding AG in 2012.

Infosys’s local rivals Wipro Ltd and HCL Technologies Ltd as well as Nasdaq-listed Cognizant Technology Solutions Corp have also sealed several acquisitions in recent years. Cognizant has been especially active. It struck its seventh acquisition of 2020 earlier this week when it snapped up cloud specialist 10th Magnitude.

Wipro has also bought two companies this year. It agreed to purchase Belgium-based 4C for around $78.7 million and acquire Brazilian IT services company IVIA Servicos de Informatica Ltda for $22.4 million in July.

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