Mumbai, July 18: Wipro has entered into a dual deal with ATCO Group under which it will acquire the Canadian company’s IT services arm and provide outsourcing services to ATCO.
The Bangalore-based company today said it would acquire ATCO’s IT subsidiary for Canadian $210 million ($195 million, or over Rs 1,176 crore), payable in cash.
The sale is expected to be completed in the third quarter of 2014.
Besides, Wipro has secured a 10-year IT deal with ATCO to provide outsourcing services, which will result in annual revenues of over Canadian $120 million ($112 million, or over Rs 675 crore) for Wipro for the next 10 years.
The ATCO group is one of Canada’s premier corporations. As a $16-billion enterprise with more than 9,800 employees, the ATCO group is engaged in a range of activities from pipelines, natural gas transmission and distribution and power generation to development of business solutions and structures and logistics.
As part of the alliance, Wipro will provide outsourcing solutions, including infrastructure management and application development and maintenance, to ATCO in Canada and Australia up to December 2024.
“The arrangement is projected to result in revenues of over Canadian $120 million ($112 million, or over Rs 675 crore) to Wipro annually. We have traditionally had a strong position in the utilities space in Europe and this engagement provides momentum to our business in Canada and Australia,” Wipro chief executive (energy, natural resources and utilities) Anand Padmanabhan said a conference call.
In 2011, Wipro had acquired the global oil and gas IT practice of Science Applications International Corporation for an all-cash deal of about $150 million.
The energy and natural resources vertical has been Wipro’s fastest growing division over the past few years. In 2013-14, energy, natural resources and utilities accounted for 16 per cent of the company’s revenues against 15 per cent in the previous financial year.
On the sale of its IT services arm, ATCO said, “The decision to outsource ATCO’s IT services was due in part to increasing regulatory challenges faced by ATCO’s utility companies when applying to the Alberta Utilities Commission to include IT costs, provided by ATCO I-Tek, for recovery in customer rates.”