Wipro to acquire Canadian firm ATCO’s IT arm for $195M

Azim Premji-led global IT firm Wipro Ltd said it will acquire ATCO I-Tek, an IT business of Canadian firm ATCO for $195 million in an all cash transaction, as per a stock market disclosure. The deal is subject to customary closing conditions and is expected to be completed in the third quarter of 2014.

As the part of the agreement, Wipro will acquire all the shares of ATCO I-Tek, including current contracts and employees, as well as the assets of ATCO I-Tek Australia.

This acquisition will help Wipro to further strengthen its IT services delivery model in North America and Australia.

This is part of a much larger outsourcing deal where Wipro will provide ATCO with a complete suite of IT services over a 10-year period, which will bring in annual revenues of over $112 million (C$120 million) for Wipro annually up to December 2024.

The decision to outsource ATCO's IT services was due in part to increasing regulatory challenges faced by ATCO's utility companies when applying to the Alberta Utilities Commission to include IT costs, provided by ATCO I-Tek, for recovery in customer rates. 

"This alliance ensures ATCO can focus on growing our core businesses of structures and logistics, utilities and energy while Wipro delivers the strategic and innovative IT solutions required to support our global operations," said Brian Bale, senior VP and CFO, ATCO.

ATCO provides solutions in the areas of structures & logistics (manufacturing, logistics and noise abatement), utilities (pipelines, natural gas and electricity transmission and distribution), energy (power generation, natural gas gathering, processing, storage and liquids extraction) and technologies (business systems solutions). The firm employs over 9,800 people worldwide.

"Our focus will be to enable ATCO to enhance their competitiveness by deployment of strategic solutions and efficient delivery of IT services,” said Anand Padmanabhan, chief executive - energy, natural resources and utilities at Wipro.

“We have traditionally had a strong position in the utilities space in Europe and this engagement provides momentum to our business in Canada and Australia. The alliance with ATCO enhances our capability to create, nurture and tap local talent to power our growth journey in Canada," added Padmanabhan.

This would be Wipro’s first acquisition since January this year even though it has invested in small firms in the recent past including some technology startups.

This also happens to be its biggest acquisition in almost seven years. In 2007 it had bought Infocrossing for almost $600 million. It has acquired smaller firms since then, including Opus Capital for around $75 million last year.

(Edited by Joby Puthuparampil Johnson)

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