Five reasons why Infosys acquired Panaya

Infosys announced that it had acquired US-based automation technology company Panaya for $200 million .

It said it expects to close this transaction by the end of this financial year (31 March). Here are five reasons why Infosys acquired the company.
 
1. It is all about cloud play
 
While Indian services companies are good at traditional enterprise applications, deployment and support, a lot of this is moving to the cloud. Panaya is a software-as-a-service (SaaS) company that provides cloud-based quality management services for enterprise applications.
 
2. Emphasis on IP

Infosys CEO and MD Vishal Sikka's vision has all been about moving away from plain vanilla services to Intellectual Property based differentiatiors. With its patented disruptive technology which enables change impact analysis and automated code remeditation, Panaya brings this to the table.
 
3. Strategic fit

As Sudin Apte, CEO of Offshore Insights - an outsourcing research advisory firm - says, Panaya is all about strategic fit, which will help Infosys improve its automation and delivery engine.
 
4. Reasonable price

Panaya, which started in 2005, is believed to have raised $39 million till date from PE funds. With its IP and customer base, which boasts the likes of Coca-Cola, Unilever and Mercedes Benz, the valuation seems reasonable. It is a medium sized acquisition.
 
5. Cash deployment

Infosys is sitting on cash reserves of $5 billion. Even a $200-million acquisition of Panaya is just a small buy for the company. The move, however, goes some way in ensuring Sikka's promise of deploying capital to capitalise growth opportunities.