Zensar divests its non-core global Third Party Maintenance business

Zensar, a digital solutions and technology services company, on Monday said it has entered into an agreement with Service Express LLC to divest its global Third Party Maintenance (TPM) business.

This is in line with Zensar's commitment to focus on and invest in its core businesses which comprised 96 per cent of its revenues as on the first quarter of FY2021, a statement said.

"Sale consideration comprising of USD 10 million in cash on the closing date, subject to closing conditions and an additional deferred earnout of USD 5 million, based on performance, set out in the stock purchase agreement," a regulatory filing said.

The expected date of completion of sale is December 18, 2020 or upon fulfilment of closing conditions, whichever is earlier, or such other date, as mutually agreed, it added.

Zensar's TPM business provided third party hardware maintenance support for a wide variety of data centre equipment and platforms. These services include remote support, call handling, spare parts, logistics management, replacement and installation, repairs and field support.

As part of its long-term strategy, Zensar had identified two non-core businesses, comprising Rest of the World (RoW) business and the TPM business. Zensar had divested the RoW business last year and is now divesting the TPM business.

Under the terms of the transaction, Zensar's TPM business will be transferred to Service Express, a leading TPM service provider headquartered in the US, by way of a 100 per cent share sale of Zensar's equity shareholding in PSI Holding Group Inc -- a wholly owned subsidiary of Zensar Technologies Inc.

The closing of the transaction is subject to approval by shareholders of Zensar Technologies Limited, the statement said.

"With the divestment of both the non-core businesses, RoW earlier and TPM with this transaction, our complete focus and attention is to grow our core businesses comprising of Digital, Cloud and IT services business. We are executing very well to our long term strategic priorities and growth," Sandeep Kishore, CEO and Managing Director of Zensar Technologies, said.

Navneet Khandelwal, Chief Financial Officer at Zensar Technologies, said the divestiture provides the company with additional resources to invest in primary business areas, which will be of relevance to its customers and partners.

The transaction will be EBITDA, PAT (profit after tax), cash flow and ROCE (return on capital employed) accretive to Zensar, he added. Ron Alvesteffer, CEO of Service Express, said this business is in line with its core offerings and the company is confident that it will help accelerate its growth in the TPM industry.