We reported earlier that many Indian companies are looking for growth opportunities outside US. This has so far resulted in the rumored interest of Infosys in the soon-to-be-sold Mysis. Amidst the current bout of speculations regarding a possible takeover bid for Misys plc, Jefferies & Co. revisited its long-held view that it is now in the final phase of the value realisation project that Mike Lawrie and ValueAct Capital embarked upon four years ago.
“We think the remaining two divisions are likely to be sold. We see upside of at least 20 percent from current levels and reiterate our ‘Buy’ rating,” said Milan Radia, an analyst at Jefferies.
Radia said Misys has fully separated its core banking and capital markets divisions, perhaps indicating its willingness to sell these divisions separately. In the absence of a full bid, Misys will, in the analyst’s view, seek to sell core banking first.
The Indian vendors, Infosys Technologies Limited are obvious candidates, in Radia’s view, given their strength in banking software. This assumption is based on the information emanating from Infosys indicating that they are on the lookout for acquisitions with a cash chest of more than $3.7 billion, and has an appetite to acquire companies that could go close to a billion US dollars, its CEO-designate SD Shibulal said.
“We can easily absorb acquisitions that are around 10% of our total revenue base of $6 billion, but if need be we are ready for bigger acquisitions as well,” the co-founder who is due to be elevated from the chief operating officer’s position,” said in an interview recently.
He said the company, which is mainly looking at building competencies through buyouts, was eyeing a deal size of between $300 million and $900 million. “As and when the opportunity (for acquisition) comes the cash available with us would come handy.”The Bangalore-based giant has so far been conservative in buyouts while its cash chest has been growing since last year.