Infosys to buy US digital commerce firm Kallidus Inc for $120 million

Posted Apr 25, 2015 by ET Bureau at Economic Times. See original article here.

BENGALURU: Infosys has agreed to buy Kallidus Inc, a US-based digital and mobile commerce solutions provider, for about $120 million in its second significant acquisition in the last three months. The acquisition price, which amounts to about Rs 750 crore in cash, includes a deferred component and retention bonuses, India’s second largest software firm said on Friday.

The San Francisco headquartered Kallidus, which operates under the brand name Skava, provides ecommerce solutions like mobile websites, apps, digital catalogues and social commerce offerings through its platform. It could bring in a mix of service and license revenues to Infosys along with nearly 250 employees.

“This is a good move to take Infosys to the next level because they are not going to get much organic growth from here. Everybody in the industry has been talking about slowing growth,” said Deepak Shenoy, founder of financial analytics firm Capital Mind.

Nine months since former SAP executive Vishal Sikka took over as CEO of Infosys, the company has made a push towards newer technologies and hasn’t been conservative in using its growing cash reserve. In February, Infosys had bought Israeli automation technology company Panaya for $200 million, or about Rs 1,250 crore, in cash. At the end of March 2015, Infosys had Rs 32,585 crore of cash and cash equivalents.

“They need to use that cash. Anything that does that is good. The question is, can they do it in time? They will have to do 30 such acquisitions to use up their cash,” said Shenoy.

Founded in 2002 by former Microsoft employees Arish Ali and Sudha KV as a mobile gaming company, Kallidus started serving retailers in 2008. It counts top retailers such as GAP and Macy’s among its clients. Its reported revenues of $10.2 million, or about Rs 64 crore, in 2012, up from just $1.2 million in 2009, according to a San Francisco Business Times report in August.

With its acquisitions, Infosys is looking to differentiate its “service lines” from rivals such as TCS and Cognizant.

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