Bangalore: Tech major Wipro Technologies and leading global financial services company Citi have announced that they have reached an agreement for Wipro to acquire Citi Technology Services Ltd for an all cash consideration of approximately $127 million.
Citi Technology Services Ltd is the India-based captive provider of information technology services and solutions to Citi entities worldwide.
As part of the transaction, Wipro and Citi will sign a Master Services Agreement for the delivery of Technology Infrastructure Services and Application Development and Maintenance services for a period of six years.
Citi has 1,650 employees and Wipro will absorb all of them.
Reuters adds
"It's a good deal for both Citi and Wipro," said R K Gupta, managing director of Taurus Mutual Fund. "While Citi gets some liquidity for its core business, the outsourcing contract gives Wipro a good revenue visibility."
Citi Technology Services launched in 2005 and is expected to report revenue of $80 million in 2008, up from $53 million last year. It has 1,650 employees in its two centres in Mumbai, India's financial hub, and Chennai in south India.
The unit, which services Citi's businesses in 32 countries, provides technology infrastructure and application development and maintenance services, the statement said.
"The transaction is consistent with our efforts to improve our operating leverage while we focus on our core banking operations," Don Callahan, Citi's chief administrative officer, said in the statement.
Girish Paranjpe, joint-CEO of Wipro's IT business, said the acquisition of Citi Technology Services would help it win outsourcing deals from other global financial services companies, which are at the centre of global economic turmoil.
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