30th April 2012. Wipro Limited (NYSE:WIT) today announced that it has signed an agreement to acquire Promax Applications Group (PAG), a leading player in trade promotion planning, management, and optimization solutions for A$35 million in cash, to help the software exporter tap the market for analyzing customer data as it looks to drive growth at its outsourcing division. The acquisition follows a January announcement of a strategic partnership between the two firms.
Completion of the acquisition is subject to customary closing conditions and regulatory approvals and will be closed in the current April-June 2012 quarter. The newly formed entity will be called as Wipro Promax Analytics Solutions Pty Ltd.
Port Stephens (Newcastle) based Promax, which has 71 employees and 45 marquee clients across the food and beverages, pharmaceutical and wine and beer segments, is likely to acheive A$15-16m revenue in the current fiscal year ending June, said Rishad Premji, chief strategy officer at Wipro’s IT services business. The operating margins at Promax is broadly in line with the overall margins at Wipro’s IT services business of nearly 21%, he Premji added. The implied price is therefore in the region of 10 times Promax’ operating margins.
With headquarter operations based at Port Stephens near Newcastle, and with offices now in New Zealand, Japan, Central Europe, United Kingdom and North America, PAG boasts an impressive stable of global consumer goods companies including Manassen Foods, Pernod Ricard, SPC Ardmona, Tetley, Campbell Customer Products, Pharmacare and Symbion.
Promax was founded in 1989 by Don Nicol (CEO), Scott Trevena (CTO) and Geoff Cutler (Director), all of whom were experienced consultants in the fast moving consumer goods market. Geoff Cutler founded Promax in 1988 having been a consultant with PE Consulting in South Africa. Don joined Promax in 2004, and was previously the Australian MD and a shareholder in Demand Planning firm Mercia Software (UK), acquired by Finmatica in 2002 and subsequently sold to Infor. Scott founded Trade Systems Technology, which merged with Promax on 2007 and is responsible for its Trade Promotion Management software.
Don Nicol, CEO of Promax Applications Group, added “We are excited and proud at the prospect of joining Wipro which is recognized globally for its comprehensive portfolio of services and, strategic focus on advanced analytics capabilities. PAG will help Wipro to differentiate its offerings in the trade and marketing management space through an added value proposition. The combined entity will provide clients access to an enhanced portfolio of technologies and solutions, and provide employees enhanced training, growth and career opportunities.”
“Analytics is a key growth driver of Wipro’s growth strategy. The acquisition of Promax Applications Group will strengthen Wipro’s positioning and capability in management, analytics and optimization of trade promotions, and further extends our leadership in analytics and information management services. Combining PAG’s deep industry expertise with Wipro’s proven experience in delivering end-to-end large business solutions to global clients, will enable our clients to maximize the ROI of Trade Promotion spends”, said K.R Sanjiv, Senior Vice President and Global Head, Analytics and Information Management, Wipro.
As per industry estimates, consumer focused companies spend 12 to 25% of their gross annual sales on trade promotions. Organizations are increasingly leveraging analytics to enhance effectiveness and maximize the return on investment (ROI) of their spend on trade promotions.
The NYSE and Mumbai-listed company–one of the most aggressive in building business through acquisitions among its Indian peers. In the analytics area, the Bangalore-based company has more than 8,000 staff and revenue of more than $600 million in the last fiscal year ended March 31, and is growing upwards of 20 per cent annually, according to a recent analyst conference call.
Premji, the son of billionaire Wipro founder Azim Premji, identified three major segments in which Wipro is keen on acquisitions. The strategy is to fill the gap in some of its service domains and to enhance Wipro’s capabilities in specific technologies like analytics, enterprise mobility and cloud computing, Premji said. The company is also looking to expand its footprint into new countries, including France and Germany, through acquisitions. Wipro’s last major acquisition was more than a year ago, when it agreed to buy the oil and gas technology business of U.S.-based SAIC Inc. in a cash deal of about $150 million. Wipro is known for its ‘string of pearls’ acquisition strategy, focusing on buying assets with a niche focus.
Indias’ Avendus Capital acted as the exclusive financial advisor to Wipro on this transaction.
About Wipro Limited (NYSE: WIT)
Wipro provides comprehensive IT solutions and services, including systems integration, Information Systems outsourcing, IT enabled services, package implementation, software application development and maintenance, and research and development services to corporations globally. Wipro Limited is the first PCMM Level 5 and SEI CMM Level 5 certified IT Services Company globally. Wipro also has a strong presence in niche market segments of Infrastructure Engineering and Consumer Products & Lighting. For more information, please visit our websites at www.wipro.com
Promax Applications Group (PAG) is a world–leading specialist in trade promotion planning, management, and optimization solutions. Promax solutions are result of more than twenty years’ experience working in close collaboration with leading consumer goods manufacturers, retailers and distributors.
Promax solution has been designed to allow a seamless, automated process to Track, Predict and Optimize promotions and trade spend. It incorporates the most sophisticated tools to maximize a client’s return on trade spend investment, and deliver optimal outcomes for retail partners. For more information, please visit www.promaxtpo.com