Software outsourcing firm Camelot Information Systems (NYSE: CIS) has quietly raised the value of its management-led buyout offer, as it nears its ultimate goal of going private due to lack of interest from Wall Street investors. Even with the increased offer, Camelot is still just worth just under $100 million, a tiny fraction of what it was once worth when investors were much more bullish on the company and China’s software outsourcing sector in general. The looming de-listing also comes just a week after Pactera (Nasdaq: PACT), one of China’s only other major publicly traded IT outsourcing firms, said a group seeking to buy the company had lowered its bid due to weakening outlook. (previous post) Read Full Post…
I’ll finish this Friday by taking a look ahead to next week, which should see the creation of a Chinese IT outsourcing leader when shareholders are likely to approve the combination of HiSoft (Nasdaq: HSFT) and VanceInfo (NYSE: VIT), the nation’s top 2 listed firms. I hesitate to use the word “giant” to describe this newly merged leader, as it will still be relatively small with a modest $670 million in annual revenue and a market capitalization of just under $700 million. By comparison, Indian IT outsourcing giant Infosys (Mumbai: INFY) expects to earn over $7 billion in revenue for its current fiscal year, meaning the new HiSoft-VanceInfo will be less than a tenth as big.
Less than 2 weeks after HiSoft (Nasdaq: HSFT) and VanceInfo (NYSE: VIT) announced their landmark merger agreement, we’re getting word of another significant acquisition in the IT outsourcing space with a new purchase plan by China-listed Beyondsoft (Shenzhen: 002649). The rapid announcement of 2 such major deals could indicate that much-needed consolidation is finally coming to this lucrative but highly fragmented industry, which holds the potential to produce major companies that could someday rival big Indian outsourcing firms like Infosys (Mumbai: INFY).
