Technology company Wipro is to acquire cloud services company Appirio
Wipro Limited, a leading information technology, consulting and business process services company, has announced that it has signed a definitive agreement to acquire Appirio, a global cloud services company that creates next generation worker and customer experiences for a purchase consideration of $500 million.
Established in 2006, Appirio is headquartered in Indianapolis with offices in San Francisco, Dublin, London, Jaipur, and Tokyo and has 1250 employees worldwide. Appirio is a trusted partner to some of the world’s leading brands, including Stryker, Robert Half, Johnson Controls, Cardinal Health, Coca-Cola, eBay, Facebook, Home Depot, and Sony PlayStation.
“In an increasingly digital world, as consumer behaviours and expectations continue to be reshaped by experiences, companies are recognising that they need to transform how they engage with customers and employees by leveraging the power of Cloud.
Appirio and Wipro are coming together to unlock transformational synergies in the applications space and help enterprises create new business models,” said Abidali Z. Neemuchwala, Chief Executive Officer & Member of the Board, Wipro Limited.
Wipro will consolidate its existing cloud applications practices of Salesforce and Workday under the Appirio brand and structure. Chris Barbin, Chief Executive Officer of Appirio, will lead the expanded business.
“When you combine Wipro’s global scale and deep digital focus with Appirio’s transformative worker and customer experience expertise, and best in class team, brand, and partners, you create a formidable force in the industry,” said Chris Barbin, Chief Executive Officer of Appirio.
“Together, our aim is to dominate the market and claim the top spots in industry Net Promoter Score, market share, and best places to work.”
“Barbin and his team have spent the last decade building Appirio into a global leader delivering amazing customer experiences with Salesforce,” said Marc Benioff, Chairman and Chief Executive Officer, Salesforce. “I couldn't be more proud of Appirio as it joins Wipro, where together they will continue to drive customer success on a much larger scale.”
“As one of our earliest partners, Appirio has played a key role in the Workday Community, and we’re thrilled to see such a great opportunity for the team’s continued growth,” said Aneel Bhusri, Co-founder and Chief Executive Officer, Workday. “With Appirio, Wipro gains an organisation with deep industry expertise and a strong commitment to customer service, dedicated to helping companies take their businesses to the cloud.”
The acquisition is subject to customary closing conditions and regulatory approvals and is expected to be closed in the quarter ending December 31, 2016.
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M&A activity key lever for future tech sector growth
Despite the continuing uncertainty of the pandemic, the tech sector has witnessed soaring dealmaking activity over the past year, rocketing in the second half of 2020, with the last quarter of 2020 a record one for M&A activity, and momentum continuing into 2021.
Dealmaking in tech sector soars in past year
And the latest figures bear this out with the number of technology M&A deals totalling US$208.44bn globally in Q1 2021, according to GlobalData. While the US holds top spot both in volume of deals (1034) and total value (US$140.61bn), Europe ranked next with 649 deals (US$44.49bn) with the UK continuing its reign as Europe’s biggest M&A market with 204 deals.
In particular, megadeals – those valued at US$5bn or more – soared in 2020 representing 59% of all global technology sector deal value in 2020, up from 47% in 2019, according to the latest edition of the EY Technology Global Capital Confidence Barometer.
This tech sector trend towards megadeals is backed up by EY’s CCB data, with 16% of tech sector respondents planning to pursue transformative deals valued at US$5bn or more in the near-term.
While technology deal activity “all but stopped at the beginning of 2020 after fluctuating between historic highs and lows, companies pivoted quickly and tech M&A exploded in the second half of the year”, says Barak Ravid, EY Global TMT Leader for Strategy and Transactions.
M&A activity level for tech sector growth
Looking ahead to the future, technology executives are optimistic, with nearly half (47%) expecting profitability to fully rebound this year, according to CCB data, compared to 23% across all sectors, and with more than half (51%) planning to pursue M&A in the next year in order to sustain growth.
According to Ravid, M&A activity is increasingly becoming a key lever for growth as businesses look to recover.
“To position themselves for future revenue growth, tech companies are now adjusting their M&A strategy to focus more on a target’s business resilience, digital technology alignment and to gain market share through consolidation,” says Ravid.
However, with an increasingly competitive deal market and ongoing geopolitical tensions, the majority of tech execs expect to see more competition in the bidding process for assets over the next year, primarily from private capital.