TechM buys LCC for $240 mn in largest Indian IT deal this year

In the largest acquisition in Indian software services space this year, Tech Mahindra will buy out US-based Lightbridge Communications Corporation (LCC) for USD 240 million (over Rs 1,486 crore) in an all-cash deal.
The acquisition -- expected to close by March 2015 -- will help the country's fifth-largest software services firm further strengthen its presence in the rapidly growing telecom and enterprises network market.
This is Tech Mahindra's largest acquisition so far. In last two financial years, the Mumbai-headquartered firm has acquired seven firms, including Satyam Computer Services, Hutchison Global Services and Comviva Technologies.
Headquartered in Virginia (US), LCC is one of the world's largest independent global providers of network engineering services to the telecommunications industry. It has 5,700 employees in over 50 countries, of which 800 are in the US.

With an annual revenue of about USD 430 million, LCC has built 350 networks and designed more than 350,000 cell sites for over 400 customers worldwide.
Speaking to reporters in a conference call, Tech Mahindra Executive Vice Chairman Vineet Nayyar said total cash outflow for the deal is expected to be between USD 200-220 million as LCC has a shareholder debt of about USD 85 million, some part of which Tech Mahindra may pay later.

It will be funded through internal accruals, he added.
"We welcome a diverse workforce of 5,700 network professionals across five continents and more than 50 countries. We expect network services to be a major growth engine for our organisation," Nayyar said.

Subject to regulatory approvals, the transaction is expected to close by the fourth quarter of 2014-15, he added.
"We have a lot of common clients but the deal will give us access to 20-30 new clients in parts of Asia, Israel and Latin America. The acquisition positions us as a pre-eminent partner for network services globally," Tech Mahindra MD and CEO C P Gurnani said.
It will also help further differentiate Tech Mahindra's offerings to both communications and enterprise customers, he added.
Market watchers said the acquisition is the largest so far this year in the Indian IT services space.

In July this year, India's third-largest software services firm Wipro had acquired the IT services division of Canadian company Atco for USD 195 million.
In September this year, NASDAQ-listed Cognizant said it will acquire US-based TriZetto Corporation for USD 2.7 billion in an all-cash deal.
However, since Cognizant is not listed on Indian bourses, Tech Mahindra's acquisition is the largest so far this year.