Take Solutions, Four Soft to decide on merger in 2 weeks

Chennai-headquartered Take Solutions and Hyderabad-based Four Soft are expected to take a final decision on their proposed merger in the next fortnight after a delay of four months. The merger plans have been delayed because of differences over valuations and the share-swap ratio.

“The boards of both companies will arrive at some decision in the next 10-15 days. The final merger ratio is being discussed,” H R Srinivasan, founder, Take Solutions, told Business Standard.

He added that the companies had to go through a fairly elaborate exercise as both have reasonable operational spreads.

The merger will create a global, comprehensive company, offering one of the largest supply chain management (SCM) products.

It will also allow Take Solutions to have a presence in the European market. Almost 60 per cent of Four Soft’s revenues flow in from Europe.

Take Solutions, meanwhile, is already expanding its European presence, said Srinivasan. The company will have a presence in Europe by the third quarter of FY2009.

“We already have revenues coming from Europe. Currently, they are very small at just 4 per cent, but in the next two years we expect the revenues to be around 20 per cent,” he added.

Take Solutions will grow its Europe operations through the organic and inorganic route. Organically, the company will invest around $2-3 million (Rs 8.7 crore to Rs 12.7 crore) for scaling up its office and staffing.

“We are also looking for an acquisition in Europe that will either add to our existing supply chain capability or in the material management segment. We have $30 million on our balance sheet, part of which can be used for this purpose,” said Srinivasan.

Currently, the US accounts for over 60 per cent of the company’s revenues.

Take Solutions registered a net profit of Rs 17.40 crore and revenues of Rs 93.60 crore in the quarter ended June 30, 2008. Four Soft’s net profit touched Rs 27.73 crore during the same period.

Its revenues were Rs 72.23 crore, registering a y-o-y growth of 53 per cent. The shares of Take Solutions ended at Rs 540 and Four Soft closed at Rs 28.15 on the Bombay Stock Exchange (BSE).