Citigroup Inc. continues its corporate makeover with its latest divestment. The New York-based financial services firm unloaded its India-based back-office unit, Citigroup Global Services Ltd., Wednesday to information technology giant Tata Consultancy Services Ltd. for $505 million in cash.
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Citigroup, which is in a pitched battle with Wells Fargo & Co. to buy Wachovia Corp., is raising cash by selling its noncore assets. The deal to sell the office group has been rumored for many months.
"The acquisition of CGSL has two immediate strategic benefits for TCS," said N. Chandrasekaran, chief operating officer and executive director of the Indian company, in a statement announcing the deal. "It gives us the ability to offer a comprehensive end-to-end, domain-led solution for business operations of large financial services institutions. It also positions us well to create banking processing platforms by integrating our products and process capabilities.''
In addition to the sale, Citigroup is giving TCS a $2.5 billion, nine-and-a-half-year technology outsourcing contract. TCS will provide Citigroup with application development, infrastructure support, help desk and other process-outsourcing services. The deal is expected to close in the fourth quarter of 2008. - Donna Block
