Mahindra Satyam in talks to buy European aerospace engineering firm

IT services provider Mahindra Satyam is in discussions to acquire an aerospace engineering firm in Europe. The acquisition is part of a larger plan by the company to improve its offerings in engineering services, and in the healthcare and financial services verticals.
Mahindra Satyam

Satyam is likely to finalise the transaction in a couple of months, said two senior company officials, without providing more details. Currently, around 4,500 employees provide engineering services, of whom 1,000 specialise in aerospace engineering.

Mahindra Satyam CEO CP Gurnani responded to an ET query about the potential acquisition, saying it was “totally speculative.”

“We are in the market for acquisitions, but we have nothing on the plate right now,” he said.

An aerospace acquisition will also help Mahindra & Mahindra to strengthen its foothold in aeronautics. The engineering services division of IT companies help aircraft manufacturers design aircraft using embedded software systems that ensure a high degree of accuracy. Mahindra Satyam and companies such asInfotech Enterprises and Tata Consultancy have in particular developed expertise in this area. Software industry grouping Nasscom estimates the annual business potential from engineering services at $4 billion.

“We (Mahindra Satyam) intend to complete two acquisitions by the end of the year. We would also be looking at BPO businesses,” said a company official. He said leaders from various business units have been asked to submit proposals so management can evaluate them.

Mahindra Satyam could spend close to Rs 800 crore on these two acquisitions, he added. The company had a cash balance of a little over Rs 3,000 crore at the end of March.

“Airbus and Boeing are coming out with new aircraft-the A 320 Neo and 737Max. There are also manufacturers such as Pratt and Whitney that are launching new models every year. These programmes run for years and there is opportunity waiting to be tapped even in high-precision designing and numerical control tools for component manufacturers,” said K Ashok Kumar, an independent consultant and former chief technology officer at Infotech Enterprises.(curtsey: economic times)

Rupesh Yatesh Dalal
Head Research Department

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