Subex acquires Azure for $140 million

Largest foreign acquisition by an Indian IT firm.

In the largest overseas acquisition by an Indian software company, Subex Systems is acquiring UK-based Azure Solutions for $140 million (Rs 620 crore) in a majority stock transaction.

According to Subash Menon, chairman and co-founder of Subex Systems, the acquisition will catapult the Bangalore-based company to the top position with a 24 per cent share of the market.

"This deal will clearly propel Subex Azure to the position of market leader, way ahead of the competition," he added.

Subex is offering 97 per cent stock and 3 per cent cash for the acquisition. In the merged entity, the Azure management will hold 12 per cent, while its three main investors, New Venture Partners, Doughty Hanson Technology Partners and Intel Capital, will hold around 22.5 per cent collectively. Menon will hold 12 per cent, down from the current 18.57 per cent.

After the deal is finalised in about a month, Subex will be renamed Subex Azure Ltd. The company will count among its customers 23 of the world's largest 40 telecommunications firms, including British Telecom as a marquee customer, and will have a customer base of over 150 installations across 60 countries. It will have a total employee base of 500, including Azure's 200.

Subex closed 2005-06 with a top line on product revenues of Rs 116 crore (total, including services, revenue Rs 181 crore) with profits of Rs 39 crore. Azure is a $31 million firm.