UPDATE 1-India’s Wipro to buy SAIC energy tech biz for $150 mln

* Deal is valued at about 6 times EBITDA

* Indian IT outsourcers looking to diversify services

* Wipro U.S. shares rise

(Adds details from call)

By Bharghavi Nagaraju

BANGALORE, April 1 (Reuters) – Wipro Ltd , India’s
No. 3 software services exporter, on Friday said it would
acquire SAIC’s global oil and gas technology services
business for $150 million in a move that expands it offerings
beyond its core of financial services.

SAIC’s oil and gas technology business has annual revenue of
$188 million and employs 1,450 people in the United States,
Europe, India and the Middle East, Manish Dugar, chief financial
officer of Wipro’s IT unit, said on a conference call.

Wipro’s New York shares were up 2 percent in early
Friday trade after the deal.

The SAIC unit provides consulting, systems integration and
outsourcing services to global oil majors, Wipro said.

The purchase price values the SAIC unit at nearly 6 times
earnings before interest, tax, depreciation and amortization
(EBITDA). By comparison, iGate’s $1.2 billion deal in
January for control of Indian outsourcer Patni Computer
was valued at about 8 times EBITDA.

“Oil and gas companies are investing in the upstream
business while looking at rationalizing cost through IT,” said
Anand Padmanabhan, senior vice president of Wipro’s Energy unit.

Wipro’s IT business, which develops software applications,
integrates IT systems and manages call centres for clients such
as Citi , Cisco and Credit Suisse ,
accounts for about three-quarters of its revenue.

The acquisition is expected to close by June and will be
funded with exising cashflow.

Wipro and Indian rivals Infosys Technologies and
Tata Consultancy Services are looking for acquisitions
in key segments and geographies in order to expand their service
offerings and move up the value chain but have shied away from
big-ticket buyouts.

Wipro in February reorganized its key IT outsourcing
business in an effort to win more clients, barely three weeks
after it surprised markets by removing the joint chiefs of the
business and naming company veteran T.K. Kurien as the new chief

Wipro has been struggling to keep up with sector leaders TCS
and Infosys in winning large outsourcing contracts.

Wipro shares closed 0.5 percent lower at 475.85 rupees in a
weak Mumbai market before the deal was announced.

(Reporting by Bharghavi Nagaraju; editing by Sumeet Chatterjee
and Tony Munroe)

UPDATE 1-India’s Wipro to buy SAIC energy tech biz for $150 mln