The Panaya Acquisition
If mere numbers are considered, Panaya is a small blip on the radar of the global Information technology behemoth Infosys. The deal is valued at only $316 million dollars which is not even 1% of the valuation of Infosys. However, this Panaya acquisition has shaken the company to its core. It has created a rift between the management and the promoters which ultimately ended with the resignation of CEO Vishal Sikka. It has also maligned Infosyss image as a transparent company.
To the outsiders, it seemed like the conundrum related to the Panaya acquisition was over once Vishal Sikka exited the company. However, this controversy refuses to die down. Less than a year after the exit of Vishal Sikka, Salil Parekh, the new CEO of Infosys has put the acquisitions up for sale. This means that Panaya and another subsidiary called Skava will be sold off by the company less than two years after their acquisition.
As a result, the storm over the Panaya acquisition is brewing again. In this article, we will have a closer look at some of the facts related to the Panaya deal and why it has led to a controversy of this magnitude.
The Panaya Deal
There is a widespread belief in Infosys that people close to former CEO Vishal Sikka have significantly benefitted from the Panaya deal. The acquisitions made by the whistleblower are as follows:
What Happened Now?
The newly appointed CEO, Salil Parekh has now classified the Panaya deal as valueless. The assets which were claimed to be strategic when acquired are today being classified as valueless. The problem is that four out of the seven members on the board today were also present when the acquisition was being done. The whistleblower is now questioning the change of opinion of these board members. Why are they writing down significant amounts as losses from the Panaya acquisition? If the technology was so strategic to the company, why isnt the company holding on to it?
How is it that the same board members now feel that Panaya is of now use to the organization? This raises questions about the effectiveness of the corporate governance process at Infosys.
Speculations are rife about the real reason why Panaya has been put up for sale. There are several possibilities and some of them are listed below.
There is immense speculation behind what the reality is. However, it is unlikely that the average person will ever know what really happened at Infosys. The truth about Panaya may be lost forever behind closed boardrooms. The failed Panaya acquisition is an example of the lack of governance processes in top Indian multinationals.
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