Wipro inks $700 mn digital transformation deal with wholesaler METRO

Wipro inks $700 mn digital transformation deal with wholesaler METRO
METRO flags in front of the company's headquarters in Düsseldorf, Germany  |  Photo Credit: METRO
23 Dec, 2020

Indian top-tier information technology (IT) services company Wipro on Tuesday said that it will assume control of two IT units of German wholesaler METRO, in a $700 million dollar deal earmarked for a period of five years, to digitally transform the latter.

The Bengaluru headquartered company said it will take over METRO-NOM in Germany and subsidiary METRO Systems in Romania.

The transaction’s immediate purchase consideration stands at €40 million, as per a stock exchange filing. Set to close by April 2021, the deal will see over 1,300 employees across Germany, Romania and India transfer to Wipro.

The agreement is expected to extend for up to four additional years, and can incur a potential spend of up to $1 billion, a statement said.

Wipro said it will deliver a complete technology, engineering and solutions transformation programme for METRO. The programme, it said, will encompass cloud, data center services, workplace and network services, along with application development and operations to provide an integrated, flexible and robust digital infrastructure.

The partnership will also lead to the formation of a joint transformation office and innovation council (TOIC) that will guide the businesses through the agreement, the statement said.

Düsseldorf, Germany headquartered METRO seeks support of a robust digital infrastructure at a stage where it says it is ready to focus on the activities that are going to provide the strongest possible competitive advantage.

“The Metronomians who are transferring across to Wipro are going to have access to leading edge innovations that will accelerate their careers. I look forward to the continued close collaboration and partnership with the Metronomians who will continue to support our IT needs in 25 METRO countries,” Timo Salzsieder, chief information officer at METRO, said.

METRO-nom, incorporated in 1983, provides IT and related services to METRO. The business unit registered a total revenue of  €133.5 million in the financial year (FY) ended September 2019, and €120.1 million in the FY ended September 2020.

The wholesaler group, founded in 1996, primarily operates business membership-only cash and carry stores across the globe. Up till 2020, it also operated a hypermarket chain called Real, which it sold to SCP Group in June.

“Like us, METRO AG is focused on leveraging digital transformation for competitive advantage... Wipro and METRO share a great deal in terms of culture and values, which has guided our discussions throughout, and led to the formation of the joint TOIC,” Wipro CEO Thierry Delaporte said.

As announced in September, Wipro plans to launch a digital innovation hub in Düsseldorf, Germany, to support METRO, among other clients, in the region.

Last month, Wipro announced a major rejig of service lines and markets to remodel itself with a new operating structure to get closer to its global customers. The changes will be effective January.

On Tuesday, rival Infosys  announced signing up a new German client, automotive manufacturer Daimler, for a digital transformation deal.