Shares in UK outsourcing vendor Xansa shot up over 37% Friday after the company revealed it is in advanced takeover talks with an unnamed suitor.
In trading on the London stock exchange, Xansa’s shares hit a high of 105 pence, having closed the previous day at just under 76 pence. The company released a curt, two-line statement emphasizing that talks are still ongoing and that it is by no means certain that an official offer will be made.
Reading-based Xansa has often been touted as a potential takeover target in recent months, largely due to its established presence in India. At the end of April, the company had just over 5,000 people based in the region, some 62% of its total workforce. Xansa is also currently without a full-time chief executive following the resignation of Alistair Cox last month.
Xansa’s business is founded on its application outsourcing services, but in recent years the company has branched out into business process outsourcing, winning high-profile deals with the BBC, Lloyds TSB, and the UK National Health Service. In its most recent fiscal year, Xansa reported net profit of 13.4m pounds ($27.2m) on revenue of 379.7m pounds ($771.2m).
Even before Xansa officially announced that it was in takeover talks, speculation was rife about who might be bidding for the company. The early rumors centered on Capgemini, but its chief executive Paul Hermelin moved swiftly to quash the story. The smart money now seems to be on an Indian vendor emerging with the prize, with Infosys, Wipro, and Tata the most likely candidates.
One of Xansa’s main selling points is its growing BPO business, particularly in the finance and accounting space, where it has won deals with the NHS and the BBC, among others. This portfolio would be very attractive to the top Indian players, who have all been rumored to be planning acquisitions in the BPO sector in recent months.
Interestingly, Xansa’s announcement came in the same week that Infosys announced a landmark F&A deal with Philips. Valued at $250m, the contract was one of the largest F&A deals to be won by an offshore services specialist. Infosys said that it was currently seeing good growth in F&A, as more and more companies are centralizing their global operations, making outsourcing easier.
While the Indian vendors are favorites to snap up Xansa, there are other possible candidates. HP Services has made no secret of its desire to bulk up its Indian operations, while EDS said earlier this year that it planned to spend up to $2bn annually on acquisitions over the next few years. Since making that announcement, EDS has bought Indian software testing company ReIQ Software for approximately $45m.