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Wipro’s $117 million Acquisition of Ampion

By Demi Akinjide, Saihejpal Ailwadhi, Ben Fobel, Zac Greenberg and Will Sergent (University of Bristol) and Obielumani Amudo, Mayi Hughes, Devin Vasquez, Tré Hollingsworth and Nyasia Jordan (Harvard)

Photo: FLY;D (Unsplash)

 

Overview of the deal


Acquirer: Wipro

Target: Ampion

Total Transaction Size: $117 million, full cash transaction

Date Announced: March 31 2021

Expected Close Date: June 30 2021


Wipro Limited, a global information technology, consulting and business services provider is acquiring Australian cybersecurity provider Ampion. This acquisition is part of CEO Thierry Delaporte’s strategy to go inorganic to add clients and local employees to key markets. The expected synergies from this deal will be revenue synergies. Wipro expects that the combined offerings with Ampion, powered by engineering transformation, DevOps and security consulting services, will be able to respond to the growing demand of its customers by bringing more scale and market agility. Wipro CEO Bala said, “We see Ampion as a complementary force that will help us expand our footprint and accelerate our journey in the Asia Pacific region.” Meanwhile, Jamie Duffield, CEO of Ampion said, “We believe that Ampion’s experience, talent, capabilities and proven client credentials in ANZ, coupled with Wipro’s global scale, leadership in technology, and a deep understanding of domain and delivery, will make us a truly formidable team. We are pleased to become a part of Wipro and look forward to an exciting journey together."


Company Details: (Acquirer - Wipro)


Wipro Limited, also known as Western India Products Limited, is an Indian market leading Information Technology, consulting and business process services company. Wipro facilitates its clients’ adaptation to digital trends through its use of analytics, robotics, cloud and other emerging technologies. Wipro’s truly global presence allows it to serve a wide variety of firms throughout different geographies.


Founded in 1945, headquartered in Bengaluru, India

CEO: Thierry Delaporte

Number of employees: 175,000

Market Cap: $38.4B

EV: $35.1B

LTM Revenue: $9.0B (2020)

LTM EBITDA: $1.7B (2020)

LTM EV/Revenue: 3.90x

LTM EV/EBITDA: 20.6x


Company Details: (Target - Ampion)


Ampion is a specialist technology services provider born from the merger of two leading Australian firms, Shelde and Revolution IT. Ampion provides integrated consulting services and solutions for enterprise-scale assurance, security, and transformation expertise. Its services are intended to address a critical gap in the market for an experienced, mid-tier, and onshore provider of digitization strategies and implementation support for both large and small businesses.


Founded in 2020, headquartered in Melbourne, Australia

CEO: Jamie Duffield

Number of employees: 600 consultants

Market Cap: N/A (privately held company)


Projections and Assumptions

Short-term consequences


Recently, new technologies for enterprises and public sector entities have been disrupting the IT service space in Australia. The acquisition of Ampion by Wipro is a further consequence of these new IT developments, with Wipro looking to expedite the adoption of new services such as the cloud, DevOps (the fusion of development and operations teams into a new, more cohesive framework) and resilience-related digital analytics. The combined offerings of the new merger, along with the development of this new technology will allow the firm to better cater to the growing demand of customers in the IT and cybersecurity space. Wipro’s new business model will focus on market agility and responsiveness to clients, hence increasing the firm’s efficiency and allowing it to expand to new geographies and consumers at a faster rate.


Long-term Upsides


Ampion’s location in the priority country of Australia aligns with its aim to accelerate growth by expanding its presence in the Asia Pacific region. Sharath Srinivasamurthy, research director for IDC India’s enterprise solutions and ICT practices said “Following Covid-19, IDC expects IT spending on security to ramp up in coming years… [and] we see increased demand for engineering services and DevOps capabilities.”


Wipro expects the 100% acquisition of Ampion to strengthen its offerings in cybersecurity, DevOps and engineering services. Ampion’s DevOps shortens the process of planning, creating, testing and deploying information systems and with speed being the new cost, this would greatly lower Wipro’s main “expense.” Along with digital technologies, Wipro also anticipates that ADM DevOps will contribute to 15-20% of the CAGR from FY21-FY25 which is equivalent to $290 billion in incremental revenue.


Risks and Uncertainties

While the demand for cybersecurity is high in Australia, the market itself is in the dark ages. Australia has been facing a severe skills shortage in the cybersecurity sector for the last 10 years. This shortage is responsible for more than $400 million in revenue and wages lost. Australia is currently short of 2,300 workers in cybersecurity, with an expected demand of at least 17,600 additional professionals in the sector by 2026. Furthermore, cybercrime cost the Australian economy roughly $1 billion a year. Since companies have started using digital platforms to deliver their products and services, cybercriminals have found new avenues to exploit companies and customers by hacking into systems to retrieve confidential information. Therefore, given that the Australian cyber-security market is not mature and undergoing significant disruption, Wipro and Ampion are going to have to transform, stabilise and impose liquidity into the market through their combined offerings of DevOps and security consulting services to respond to the growing demands of customers. This will not be an easy feat. However, the federal government of Australia has plans of investing over $230 million into the cybersecurity sector in the next two years. It will be interesting to see if they manage to bring scale and market agility over the coming years.


“We see Ampion as a complementary force that will help us expand our footprint and accelerate our journey in the Asia Pacific," - N.S. Bala, APMEA CEO (Wipro)

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