Virtusa today agreed to buy 53 per cent stake in Indian IT company Polaris Consulting and Services for about Rs 1,173 crore, a move that will help the US-based firm garner a bigger chunk of the global banking and finance (BFS) industry.
Virtusa would spend another Rs 587.7 crore (USD 90 million) to acquire an additional 26 per cent stake in the BSE-listed firm, in compliance with SEBI's mandatory open offer norms.
For the Massachusetts-headquartered Virtusa, the acquisition will give access to new clients and a pool of about 18,000 employees, providing it more muscle to pursue larger consulting and outsourcing opportunities.
"Virtusa expects to realise over USD 100 million of cumulative revenue synergies over the next three fiscal years from the business combination," it said in a statement.
Also, upon closing of the transaction in the next quarter, Citigroup Technology Group Inc will designate Virtusa and Polaris as a preferred vendor for providing IT services to Citi on an enterprise-wide basis.
A subsidiary of Virtusa will buy about 53 per cent shares from certain promoter entities led by Arun Jain and some other shareholders, including OrbiTech at about Rs 220.73 each.
Virtusa will also make an offer to the company's public shareholders for another up to 26 per cent of its shares for about USD 90 million (Rs 587.7 crore).
Virtusa intends to finance the transaction through a combination of cash on its balance sheet and debt. It has secured commitments for senior secured debt financing of USD 300 million from JP Morgan Chase Bank and Bank of America.
Polaris Consulting and Services had posted a net profit of Rs 47.34 crore, while its income from software development, support and BPO services stood at Rs 517.67 crore in the July-September 2015 quarter.
