India's Infosys terms media reports on Capgemini 'speculation' bid

Infosys Technologies, India's second-biggest software-maker, dismissed as "speculation" media reports on Friday that it will bid for Paris-based consultancy Capgemini, a firm with more than three times its annual sales.
But investors bought Infosys shares on the report, sending the stock up more than 2.5 percent at the start of trading on the Bombay Stock Exchange. The shares later eased to close at 1,929.2, up 0.17 percent.
Bangalore-based Infosys will use cash reserves amounting to 62 billion rupees (1.5 billion dollars) to fund the take-over bid for Capgemini, the Times of India reported, citing industry sources and people close to the matter.
"I can't comment on rumours. The nature of rumours is such that some of them are right and some of them are wrong," Infosys chief executive officer Kris Gopalakrishnan told reporters on the sidelines of a management conference.
He added that the main reason he could not comment was that Infosys was in its "silent period" before release of its first-quarter results on July 11.
Companies are not allowed to say anything in the period immediately before the release of their results that might influence their share price. Infosys, which has grown from 500 million dollars in annual sales to three billion dollars in five years, is trying to expand in an attempt to sharpen its competitive edge in the global information technology market.
The company, founded 26 years ago by seven software professionals which now employs more than 70,000 people, wants to catch up in the consulting business with bigger information-technology firms such as IBM and Accenture.
For the 12 months ended March, Infosys' net income jumped 56.6 percent to 38.5 billion rupees (943 million dollars) on sales up 45.9 percent at 138.9 billion rupees.
But the company's consulting arm ended the year with a loss of 1.1 billion rupees. "Every IT firm wants to build the consulting business," said an analyst at Mumbai-based BRICS Securities who did not wish to be named. "Infosys will be able to reinforce its business in Europe by buying Capgemini; it will help build key relationships for its IT business."