Indian outsourcing company, Wipro, announced Monday that it has signed a definitive agreement to acquire NewLogic Technologies, a privately held Austrian semiconductor IP (intellectual property) and design services company for about Euro 47 million ($US56.5 million).
The all-cash deal includes an up-front payment and performance-based payouts over a period of three years, Wipro said. The entire transaction is to be completed in a month, it added.
With revenue of about Euro 14 million in 2005, NewLogic of Lustenau, Austria, is focused on offering IP and design services in the areas of Bluetooth and wireless LAN. The company has about 120 staff working at its three design centres in Lustenau; Munich,Germany; and Sophia Antipolis, France.
Wipro of Bangalore, India, has its own semiconductor IP licensing and design services business of about $60 million a year, chief strategy officer of the Wipro Technologies division of Wipro, Sudip Nandy, said. This division employs about 1200 staff for semiconductor design.
While Wipro's core strength is in digital chip design, NewLogic is focused on analog and mixed signal design, Nandy added.
The acquisition would strengthen Wipro's presence in Europe where its current revenue from IP licensing and design services is about Euro 5 million a year, president of product engineering solutions of Wipro Technologies, Ramesh Emani, said. Over 75 per cent of the company's semiconductor IP and design services business currently comes from the U.S.
NewLogic agreed to the acquisition as it needed large investments to grow its operations, chief executive officer of NewLogic, Hans-Peter Metzler, said. Metzler will head Wipro's semiconductor IP and design services business, after the acquisition is completed.
NewLogic has some 20 customers for its services, and about 15 licensees of its IP, but its business is predominantly from Germany and France. "We will add down the line another 200 staff in Europe because in this business you need to have people close to customers," Metzler said.
After the acquisition is complete, Wipro will be working on other wireless technologies such as UWB (Ultra-Wideband) and WiMax, Nandy said.
The acquisition of NewLogic will be Wipro's third abroad. In 2002, it acquired the global energy practice of American Management Systems, a business and IT consulting company in Fairfax, Virginia, as part of its strategy to diversify from its core software services business into offering consulting services as well. A year later it acquired NerveWire, a US business and IT consulting company serving financial services clients.
Wipro, India's third largest outsourcer, posted revenue of $1.87 billion for the fiscal year ended March 31, 2005. It employed 45,835 staff as of Sept. 30, 2005. Most of the company's employees work in its Wipro Technologies division, which offers software development, business process outsourcing, embedded software and semiconductor design services.