DHRUVA COLLEGE OF MANAGEMENT

HYDERABAD

CHANGE MANAGEMENT
TERM PAPER

MERGER OF

SUBMITTED TO : PROF.MEERA MADHAVAN

SUBMITTED BY : RAVIKIRAN.P

09M035
INTRODUCTION :

Wipro infocrossing:

This term paper details the acquisition of Infocrossing (IFOX) by Indian software company
Wipro Ltd. (WIT). The cash tender offer was made public on 7 August, 2007 and the tender
offer was completed on 18 September’2007. The deal was executed by its indirect wholly-
owned subsidiary, Roxy Acquisition Corp., for all outstanding shares of Infocrossing, Inc.
(NASDAQ:IFOX) at a price of $18.70 per share in cash.

The deal was the largest overseas takeover by an Indian IT company for $600 million (around
Rs.2,425 crore) to create one of the world leaders in end to end IT infrastructure management
solutions. In fact, the Infocrossing acquisition is the second transaction after the buyout of Unza
by the consumer care & lighting division of the company in July this year to have crossed the
$100-million-mark in terms of its overall size.

ABOUT WIPRO :

Type Public
(BSE: 507685, NYSE: WIT) Industry IT services
IT consulting Founded 1945 Founder(s) M. H. Premji Headquarters Bangalore, Karnataka, India
Key people Azim Premji (Chairman)
Girish Paranjpe (joint CEO)
Suresh Vaswani (joint CEO) Services Application Development and Maintenance

BPO
Product Engineering Solutions
Technology Infrastructure Services
Consulting Revenue $6.03 billion (2010)[1] Operating income $1.144 billion (2010)[1] Profit
$1.02 billion (2010)[1] Total assets $7.498 billion (2010)[1] Total equity $4.373 billion (2010)[1]
Employees 115,900 (September 2010)[2] Website Wipro.com

Major Divisions Of WIPRO

 IT Services: Wipro provides complete range of IT Services to the organization. The range of
services extends from Enterprise Application Services (CRM, ERP, e-Procurement and SCM)
to e-Business solutions. Wipro's enterprise solutions serve a host of industries such as
Energy and Utilities, Finance, Telecom, and Media and Entertainment.
 Product Engineering Solutions: Wipro is the largest independent provider of R&D services in
the world. Using "Extended Engineering" model for leveraging R&D investment and
accessing new knowledge and experience across the globe, people and technical
infrastructure, Wipro enables firms to introduce new products rapidly..
 Technology Infrastructure called as TIS provides remote infrastructure management
solutions and services. Wipro Technologies achieves this through a Global Command Centre
(GCC) which consolidates services and resources in one place and centrally manage them. It
is a true enabler for the company for providing services in infrastructure management.

WIPRO COMPANY :
Wipro Technologies is the No.1 provider of integrated business, technology and process
solutions on a global delivery platform.
Wipro Technologies is a global services provider delivering technology-driven business solutions
that meet the strategic objectives of our clients. Wipro has 40+ ‘Centers of Excellence’ that
create solutions around specific needs of industries. Wipro delivers unmatched business value
to customers through a combination of process excellence, quality frameworks and service
delivery innovation. Wipro is the World's first CMMi Level 5 certified software services company
and the first outside USA to receive the IEEE Software Process Award.
Wipro’s complete range of IT Services addresses the needs of both technology and business
requirements to help organizations leverage leading-edge technologies for business
improvement.
Wipro takes charge of the IT needs of the entire enterprise. The gamut of services extends from
Enterprise Application Services (CRM, ERP, e-Procurement and SCM), to e-Business solutions.
Wipro’s enterprise solutions have served and continue to serve clients from a range of
industries including Energy and Utilities, Finance, Telecom, and Media and Entertainment.
Wipro’s TIS is the largest Indian IT infrastructure service provider
Wipro’s Technology Infrastructure Services (TIS) is the largest Indian IT infrastructure service
provider in terms of revenue, people and customers with more than 200 customers in US,
Europe, Japan and over 650 customers in India. It is powered by the expert skills of over 6,500
technical specialists and state-of-the-art BS 15000 certified infrastructure for operations
support.
A phased approach towards process standardization, process optimization and process re-
engineering.
Wipro BPO provides a broad range of services from customer relationship management, back
office transaction processing to industry-specific solutions. The key element of services delivery
is an integrated approach towards providing increasing value over the entire course of our
client relationships. This involves a phased approach towards process standardization, process
optimization and process re-engineering
True value from technology requires an in-depth understanding of business strategy.
Today’s businesses need partners who can talk about strategy and technology in the same
conversation. At Wipro, we believe true value from technology requires an in-depth
understanding of business strategy. Our cross-industry consulting services help you craft a
vision for your organization and then provide a specific, practical business and technology
framework that will make that vision a reality. Our consulting competencies spread across
business, process, quality and technology consulting.
We've developed a model called "Extended Engineering” that leverages synergies across the
value chain
As product manufacturers and platform vendors across the world strive to make better
products with shorter development cycles and reduced total cost of ownership, we at Wipro
Technologies partner with them to provide comprehensive solutions in product lifecycle
management and product realization. At Wipro, we've developed a model called "Extended
enginering" that allows you to leverage synergies across the value chain and progress swiftly
from concept to market. We are now the world's largest contract R&D house for telecom, auto
and electronics.

Infocrossing company :

Infocrossing, Inc. is a leading provider of managed hosting services and application

infrastructure solutions, announced today the appointment of Tom Alvary as Senior Vice
President of Sales, Cari Brookbanks as Senior Vice President of Marketing, Michael Bendit as
Vice President of Strategic Planning and Eugene Merkel as Vice President of Infrastructure &
Facilities.
Since joining Infocrossing in June, President and CEO. The highest individual in command of an
organization. Typically the president of the company, the CEO reports to the Chairman of the
Board.  Chuck Auster has been assembling a senior management team to establish Infocrossing
as the highest quality, managed hosting services brand. "These appointments represent
Infocrossing's 'Dream Team' for bridging the gap between the traditional information
technology environment and the Internet hosting world -- the convergence of IT and IP. Tom,
Cari, Mike and Gene are high profile professionals who have 'hit the ground running' to help
implement our customer-centric expansion strategy. They will have important roles in our
rollout of a rich portfolio of managed hosting services and the ongoing expansion of our
Internet Data Center facilities," Mr. Auster said.
Prior to joining Infocrossing, Mr. Auster was a Founder and Executive Vice President and chief
operating officer of IXnet, which was recently sold to Global Crossing Ltd. (stock symbol) ) in a
stock-for-stock exchange valued at approximately $2.1 billion. Tom Alvary, 38, the new Senior
Vice President of Sales, joined Infocrossing from GlobalCenter Inc., Global Crossing's Internet
services subsidiary, where he was Vice President of Content Distribution Sales. For the Internet
Data Center outsourcing business, he built new sales teams for successful market launches
throughout the U.S. and expanded GlobalCenter's IDC capacity to over 1 million square feet of
IDC space. Prior, Mr. Alvary co- launched the start-up sales team for Genuity, where he
supervised sales and rollout of the last and largest of the original Genuity data centers. Mr.
Alvary earned a J.D. degree from Loyola University and an A.B. from Vassar College.

Cari Brookbanks, 44, Senior Vice President of Marketing at Infocrossing, has over 20 years of
business-to-business and consumer products marketing, branding and communications
experience. Prior to joining the Company, Ms. Brookbanks was Vice President of Corporate
Marketing at Interliant Inc. (Nasdaq: INIT), a pioneer and leader in the global ASP market. She
was responsible for branding and Interliant's award winning strategic marketing initiatives and
communications programs. Previously, she held a number of key marketing positions within the
technology industry, after a successful career in the advertising agency business working on B2B
and packaged goods accounts. Ms. Brookbanks received a B.A. in Journalism from the
University of Houston.

Michael Bendit, 39, Infocrossing's Vice President of Strategic Planning, joined the Company
from Lucent Technologies where he was a Director in the New Ventures Group. At Lucent, he
was responsible for launching and spinning out new ventures based on Bell Labs' technologies.
Earlier, Mr. Bendit was a Principal in Booz-Allen's Communications, Media and Technology
Management Consulting practice. He has an MBA from Columbia business school and a B.S. in
Economics and a B.A.S. in Computer Science from the university of Pennsylvania.
Eugene Merkel, 34, Vice President-Infrastructure and Facilities, brings 15 years of
telecommunications experience to Infocrossing's senior management team. Most recently, he
was Senior Director, National Facilities at GlobalCenter, Inc. and was responsible for
constructing, designing, and delivering state of the art Media Distribution Centers. Previously,
he was Director of Operations at Voyager Networks, a complex web server hosting and
colocation company that was acquired by GlobalCenter in 1997.
Infocrossing, Inc. is a premier provider of complex internet hosting and managed services to
meet the growing e-commerce and web requirements of Global 2,500 companies. Infocrossing
is the leader in legacy integration, enabling companies to web-enable mission-critical data and
operations with full reliability, accessibility and security while accelerating time to market.
Strategic alliances include Cisco Systems, EMC (EMC Corporation, Hopkinton, MA,
www.emc.com) The leading supplier of storage products for midrange computers and
mainframes. Founded in 1979 by Richard J. Egan and Roger Marino, EMC has developed
advanced storage and retrieval technologies for the world's largest companies. , Intel, IBM-
Tivoli, IT Masters and Sun Microsystems. The national rollout of Infocrossing Internet Data
Centers (IDCs) is underway, with facilities also planned for select markets abroad.

This release contains forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended. As such, final results could differ from estimates
or expectations due to risks and uncertainties, including but not limited to: incomplete or
preliminary information; changes in government regulations and policies; continued acceptance
of the Company's products and services in the marketplace; competitive factors; technological
changes; the Company's dependence upon third-party suppliers; intellectual property rights;
and other risks. For any of these factors, the Company claims the protection of the Safe Harbor

1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated.

2. A form of shark repellent implemented by a target company acquiring a business that is so
poorly regulated that the target itself is less attractive.  for forward-looking statements
contained in the Private securities litigation reform act  of 1995, as amended.

Companies Involved: Wipro Technologies & Infocrossing

Wipro Technologies is a global services provider of technology-based business solutions. Wipro

has 55+ ‘Centers of Excellence’ that create solutions around specific needs of industries. Wipro
is the World's first CMMi Level 5 certified software services company and the first outside USA
to receive the IEEE Software Process Award.

Infocrossing, Inc. is a leader in Selective IT Outsourcing Solutions. Their services are designed to
provide customers with the ability to strategically outsource non-core IT operations and IT-
driven business processes to reduce costs and improve performance – without the risk or loss
of control associated with wholesale outsourcing engagements. At the core of Infocrossing's
capabilities is a national, Tier-1 datacenter infrastructure with n+1 redundancy at every level,
approximately 700 skilled professionals with expertise across every computing platform, as well
as proven processes and account management methodologies drawn from twenty years of
experience effectively servicing mission-critical IT operations for large and mid-sized companies.

Rationale for acquisition

Infrastructure as a driver of growth

Wipro Technologies has identified global infrastructure services as an important driver of

growth for the Company and is pleased to add Infocrossing, which provides integrated
managed infrastructure services to premier global clients. The acquisition will help Wipro
address the existing gap in managed hosted services in infrastructure management. This will
also open existing opportunities in the total outsourcing space, which include IT infrastructure
services. It is expected that the combined infrastructure business from the present $250 million
to touch $1 billion in 24-36 months. It gives Wipro a uniquely positioning in the remote
infrastructure management space.

Global Expansion

With this acquisition, Wipro expands its appeal as a full-service IT outsourcing firm for U.S.
customers. Before, Wipro's services offerings might have been attractive to two out of 10 U.S
companies and now it goes to seven out of 10.

Technical Capabilities

This acquisition broadens Wipro's data centers and mainframe capabilities. With its unique
Platform based solutions, Infocrossing also brings in significant expertise in Health plan & Payer
Management segments.
Human Resource Capabilities

Wipro will gain 900 workers in five U.S. data centers and the global expertise of the senior level
executives at Infocrossing.

A proven track record

With its proven track record of processing over 175 million claims annually and providing
contracted services to over 90 managed care organizations, Infocrossing will considerably
enhance Wipro's ADM & BPO offerings to its Healthcare customers.

Synergies for acquisition

The acquisition is a perfect fit for Wipro’s technology infrastructure services (TOS) and gives an
undisputed lead in remote infrastructure management services. It will leverage Wipro's
offerings in healthcare, BPO and IT infrastructure services. This will give a leadership position in
end-to-end IT infrastructure management solutions. Infocrossing will deepen its presence in
the US with addition of five state-of-the-art data center locations and approximately nine
hundred employees.

Funding of the deal

It was an all cash deal executed by Wipro Technologies. Infocrossing has entered Wipro's fold
with assets of close to $300 million, cash reserves of $22.3 million and a debt burden of $132
million. A part of the debt has also been converted because there is a convertible option. After
that, the debt will be around $55 million.

The Deal Financials

The enterprise value of the transaction was $609,429,597. Infocrossing for $18.70 per share in
an all cash deal created one of the world leaders in end-to-end IT infrastructure management
solutions. The acquisition was conducted by means of a tender offer for all of the outstanding
shares of Infocrossing, followed by a merger of Infocrossing with a Wipro subsidiary. The
tender offer was subject to a number of customary closing conditions, including regulatory
approvals, and is expected to close by the fourth quarter of 2007. As of the date of acquisition,
Infocrossing had net operating losses, which are available for carry- forward and set-off against
taxable profits in the future. The Company believes that it is more likely than not that
approximately US$ 72 of net operating losses will be available for carry-forward and set-off
against the taxable income of Infocrossing in the future. Accordingly, in the preliminary
purchase price allocation, the Company has recorded deferred tax assets of US$ 30
representing the tax benefits that can be availed. In addition, pursuant to the terms of
indenture agreement, the convertible debt of Infocrossing has been cancelled. Liabilities
assumed upon acquisition include Rs. 4,278 payable to the holders of convertible debt. Further,
pursuant to the terms of the stock option plan, all the outstanding stock options of Infocrossing
have been cancelled. Liabilities assumed upon acquisition include Rs. 823 payable to the stock
option holders.

Human Resources

Wipro had 77,478 employees as of September 30, 2007 including 926 employees who joined us
as part of Infocrossing acquisition.

Advisors

Wipro was advised on the transaction by Citigroup and represented by the law firm of Wilson
Sonsini Goodrich and Rosati, and Infocrossing was advised by Credit Suisse Securities (USA) LLC
and represented by the law firm of Gibson, Dunn & Crutcher LLP.

Expectations from the deal

Wipro expected the integration process to take 2-3 quarters. They expect revenues to pick up
led by demand from Wipro existing clients. Further, margins should improve led by 1) higher
offshore 2) better capacity utilization through more deals and 3) rationalization of costs.
Realized Benefits after the merging

Deals won

Wipro Info crossing has recently won a $275 million multi-year outsourcing deal to provide BPO
and IT services to Missouri Health Net Division, an agency run by the state government to
provide health care services to Missouri residents. Info crossing Inc has been awarded a six-year
contract to manage insurance claims and health care processes of the division. The contract can
be renewed for two more years, which could take the deal value to up to $420 million,
according to Info crossing CEO Zach Lon stein. Missouri Health Net Division was an existing
customer for Info crossing with annual billings of about $20 million. Lonstein says that after its
acquisition Infocrossing has been able to generate 19 new customer opportunities in just one
month.

Supplemented Revenue

During the quarter ended September 2007, Global IT Services including BPO reported revenues
of Rs 3249 crore, which represents growth of 10% Q-o-Q and 19% Y-o-Y. The IT services grew
9% at 2945.20 crore on the back of 7.7% Q-o-Q volume growth and 1.9%. The Infocrossing
acquisition contributed Rs 25.40 crore. Infocrossing Inc, the newly acquired Wipro subsidiary,
was awarded a US$ 275 million contract to provide fiscal agent services to Missouri HealthNet
program into 2014.

Government Policies pertinent to the merger

Supporting policies

IT Act 2000

Specific initiatives underway include enhancing the legal framework through proposed
amendments to the IT Act 2000, increasing interaction between industry players and
enforcement agencies to help create greater awareness about information security issues and
facilitate mutual support.

Policy on Overseas Investments

What has given a fillip to this M&A activity is the evolution of government policy on overseas
investments. For instance, the upward revision of the ceiling on quantum of overseas
investment and the introduction of FEMA in 2000, have changed the perspective of overseas
investments. With companies being allowed to invest 100 per cent of the proceeds of their
ADR/GDR issues for acquisitions of foreign companies, direct investments in Joint ventures and
wholly owned subsidiaries through the M&A route has become a reality. Further policy
liberalization post 2003 allowing clearance through automatic route has enabled Indian
Companies to fund to the extent of 200% of their net worth.

Timeline for Approval of proposals

In a bid to assuage corporate India’s fears over key aspects of the Competition Act, 2007, the
Competition Commission of India (CCI) has decided to ensure that 90 per cent merger and
acquisition (M&A) proposals put up for its approval are cleared within 60 days. The present
timeline is 210 days.

Complying policies and regulations

Merger Control Amendments

In September 2007, the Indian government had introduced new merger control amendments to
its Competition Act. The M&A provisions, once notified, will require foreign companies,
including those with limited access to Indian markets, to seek approvals from India’s
Competition Commission for M&As made anywhere in the world.
Complying with other regulations

Every M&A transaction in India has to ensure compliance with various regulations such as the
Competition Act 2002, Companies Act 1956, FEMA regulations, SEBI Takeover Code, Stock
exchange regulations, sector regulators, exchange control regulations etc.

CONCLUSION :

WIPRO INFOCROSSING coped with change drew by merging, this merger is doing well and
wipro is planning to merge with few other companies also. Change management and
organisational development plays a major role during acquisitions and merging of companies.