Mphasis to buy Digital Risk for $175 million +
Today’s news from Mphasis did not come entirely out of blue. One, its cash reserves were going up.
Two, the concerns over revenues from HP channel, which accounts for more than half, were on the rise. Analysts were downgrading the stock, and investors were worried.
For a company facing these two issues, making a big acquisition would seem an obvious way forward, and that’s pretty much what Mphasis did. It agreed to buy Digital Risk, a mortgage risk and compliance management solutions provider with 1500 employees in the US, for USD$ 175 million in an all cash deal. The transaction is expected to close by January 31, 2013.
The sub-prime crisis in the US shaved several percentage points off global economic growth, but it also opened up new opportunities for enterprising businesses. Indian outsourcing firms tapped a few of them. This is yet another example of a company attempting to do that. But, the fact that Mphasis is a part of HP, which is facing one of its worst times globally, makes it more interesting to watch.
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