Infosys, Microsoft planning on Sage group

India's tech poster boy Infosys may face off global software behemoth Microsoft in a rumoured e4.6-billion bid for UK-headquartered IT major Sage Group with annualised billings of around e1.4 billion.

While blazing stock market rumours placed Infosys along with Microsoft, Intuit and Goldman Sachs as possible suitors for the accounting software company Sage, a section of industry experts said India’s best-known tech brand could be gunning for a bigger French player Atos Origin in the consulting and IT services space, with revenues touching euro 5.5 billion and 50,000 employees on board.

Infosys has been hunting for global acquisitions, especially in the European market, with its name being linked to the likes of Capgemini and LogicaCMG in the recent past. However, Capgemini has vehemently denied any talks while Infosys has maintained a standard comment — “We do not comment on market rumours” — on all the recent speculations.

Infosys chairman Nandan Nilekani, who recently moved out of operational charge, is seen leading the M&A activity, which is increasingly coming on the company’s radar in recent months.

As the bid talk galvanised, Sage remained volatile on London Stock Exchange surging over 2.77% to 250 pence before declining 1.25% at the time of going to the press. Sage was yet to react to the developments, and it is not yet clear whether the company would entertain any bids at all.

Sectoral experts said Infy’s bid for Sage was highly unlikely as the Indian company usually chases large clients with service offerings while Sage provides software product to the over five million SMBs globally.

Sage, which has around 13,000 people across the world, gets major part of its revenues from the North American market and is expected to issue a trading statement by the month-end showing strong future business growth.

In context, some analysts are betting on Infy chasing a bigger target like Atos Origin, paving way for a transformational deal, especially with consulting expertise that the latter has. Industry sources have been constantly saying that Infosys is actively scouting for acquisitions, especially in Western Europe to get a significant presence in the region. British media reports quoting BG Srinivas, head of Infosys operations in EMEA (Europe, Middle East and Africa): “We are looking for opportunities that will transform our business in Europe.... That could be in the UK, France or Germany.”

Despite the conservative outlook by Infosys towards acquisitions, analysts felt that software services giant will have to go in for buyout to keep up with its growth momentum and get into newer market. The recent takeover of the Philips BPO business was also an inkling of what was in store, as for the first time it took over a contingent of around 700 people.