Indian IT multinational Wipro Ltd’s shares slid 4.1% after announcing it would buy British consultancy Capco for $1.45 billion, a deal it admitted would hit earnings in the first year.
London-based Capco makes 96% of its revenue from Europe and North America, from where Indian IT services companies have traditionally won the most lucrative contracts.
Wipro and its rivals including Infosys Ltd and Tata Consultancy Services Ltd have become major global players, offering services spanning from back-office work for banks to social media content moderation as well as traditional technical support.
Capco will give Wipro access to 30 new large banking and financial clients and make the Indian firm one of the largest end-to-end consulting and technology service providers to that industry globally, Wipro said.
But analysts also warned that integration challenges and future impairments could stem from the deal.
Meanwhile, Indian shares fell for a second straight session on Friday over worries around rising US Treasury yields and foreign funds outflows.
The losses were dominated by financial and IT stocks as the NSE Nifty 50 index fell 0.95% to 14,938.1 and the S&P BSE Sensex dropped 0.87% to 50,405.32.
The blue-chip indexes still finished the week more than 2.5% higher, thanks to positive economic growth data and progress in the country's Covid-19 vaccination campaign.
Gaurav Garg, head of research at CapitalVia Global Research, said rising US bond yields were strengthening chances that foreign investors may pull out some money from emerging markets like India.
Foreign investors had sold a net $308.7 million worth of Indian equities this week up to Thursday, Refinitiv data showed. Heavy buying by these investors in previous months had driven Indian equities to record highs.
- Reporting by Reuters