An analyst has dismissed the possibility that Indian IT services giant Infosys Technologies is considering an acquisition bid for consulting firm Capgemini.
Rumors have been swirling over a potential merger between the two companies, driving Capgemini's shares up by some 6 percent last week. When contacted by ZDNet Asia, a company spokesperson from Infosys said: "We do not comment on market rumors."
While some market observers have hailed the union as plausible, Michael R. Guilbault from Technology Business Research (TBR) has dismissed the possibility.
A senior analyst for TBR's professional services business quarterly group, Guilbault said Monday in a research note: "The likelihood that Infosys is going to purchase Capgemini is close to zero in our view."
A merger of this size, he explained, would be far too big for a company that has been focusing on organic growth since 2003, when it acquired Australia's Expert Information Systems in December.
"Infosys lags behind rivals Wipro and TCS in making strategic acquisitions to build vertical and business line expertise. The Expert acquisition was primarily a geographic buy," he said.
"We think Infosys should pursue acquisitions more aggressively in order to strengthen its international presence and gain local knowledge, but we don't think it should or would dive into a purchase as big as Capgemini," Guilbault said, noting that the IT services company is unlikely to be involved in acquisition deals above US$1 billion.
He added that Infosys treasures its corporate culture and is fearful of diluting this asset, resulting in some of the company's hesitation to grow through acquisitions. Recent history in the professional services industry indicate that integrating consultancies into the host company is one of the most challenging kinds of merger, he noted.
"Infosys isn't going to buy a bear and have to transform it into a gazelle; they'd rather just keep feeding the gazelle," Guilbault said. "[Its] management would like to avoid buying large companies that don't have models as streamlined and functional as it has."
He added that the company's top executives have often underscored Infosys's strategy to focus on growing organically because they believe they "have it 'right'".
Play video
There are currently no comments for this post.