Wipro Ltd said it has acquired Austria-based semiconductor design services firm NewLogic in an all-cash deal worth 56 mln usd. Ramesh Emani, president of product engineering solutions at Wipro Technologies, the company's global business arm, said NewLogic has become a wholly-owned subsidiary of Wipro.

'Wipro gains about 150 specialists through the acquisition, a foothold into the European markets and over 20 clients of NewLogic,' Emani told reporters yesterday.The deal includes an upfront payment of 21 mln eur and the rest on 'achieving targeted financial conditions over a three-year-period,' he said.

"In the product engineering space, ownership of IP [intellectual property] is a key asset for building services revenues," said Ramesh Emani, president of the product engineering solutions group at Wipro. "The NewLogic acquisition is a significant step in our plans to be the leader in the wireless IP and [radio frequency] technology space."

Wipro's 12,000-worker R&D business builds dedicated labs and teams for customers, providing them with custom services. The NewLogic acquisition will give Wipro the intellectual property, services, and the expertise in the communications R&D business. NewLogic's cores are used in complex wireless applications such as wireless LAN and Bluetooth. This acquisition will also give a geographic advantage to Wipro because NewLogic has a good customer base in Europe. Currently, Europe contributes to 9 percent of Wipro's revenue for R&D services in embedded products.The R&D services unit helps to differentiate Wipro from Indian rivals such as TCS and Infosys. "[This business] is very critical because the margins on R&D outsourcing are very high and so are the barriers to entry," Mr. Chowdhry said. "In this space, you need to have a very strong, experienced, and talented team that is comprised of PhDs."

Source: 1, 2Prashanth RaiTag(s):IT+Services, M&A