Scandent to merge with Cambridge

Scandent Solutions has announced that it is merging with Cambridge Solutions, a subsidiary of the US-based Aon group, which took over it in the recent past. Post-merger, Scandent will be renamed Cambridge Solutions.

The new, combined entity with a topline of close to $270 million (Rs 1,200 crore) will be among the top 10 IT companies in India, Scandent informed the stock exchanges.

The merged entity will have a total employee base of nearly 3,500. The Scandent-Cambridge combine also plans to raise $75 million in the near future through an equity issue.

Currently, Scandent Solutions has 1,200 personnel focusing on software development services for BFSI (banking, financial services and insurance), government and manufacturing verticals, while Cambridge Solutions, with 2,200 employees, focuses on claims processing business process outsourcing work.

According to Scandent, it will issue 583 fully paid-up equity shares of Rs 10 to every member of Cambridge holding one unit in Cambridge. Scandent said its share capital comprises around 2.8 crore equity shares while the share capital of Cambridge comprise 1.2 lakh units.

The total number of equity shares to be issued by the company to the shareholders of Cambridge Solutions would be a little over 7.4 crore equity shares of Rs 10 each, paid up fully.

On the issue of raising $75 million, Scandent has stated that it has all its options open through a further issue of equity shares or warrants and/or any instruments convertible in equity shares whether optionally or otherwise, global depository receipts (GDRs) or American depository receipts (ADRs) or bonds.

Pradeep Choudhry, CFO, Scandent Solutions, said, "This merger is to gain scale for our IT and ITeS business. Thus, we will be among the top ten IT firms in India."

On whether the BPO jobs from Cambridge in the US will move to India, Choudhry said it was too premature to comment on it, but he added that they were reducing new business work in the US.

Patel said, "The fresh infusion of funds will be for organic and inorganic growth. We are putting up a new centre in Bangalore, which will have a capacity for 3,000 professionals, and it will be ready by April 2006."

He added that 70 per cent of workforce expansion will happen in India, while the remaining expansion will be spread across the US, Singapore and Australia.

The company also announced that the new entity will be led by Christopher Sinclair as executive chairman and chief executive officer, and supported by Satyen Patel as executive vice-chairman. Sinclair was earlier CEO of Cambridge.