Polaris To Buy Us-Based Data Inc For $21 M

Cheenai-based Polaris Software Lab, developer of custom-made software solutions and services, has signed a memorandum of understanding (MoU) to acquire US company Data Inc for $21 million (approx Rs 92 crore) in a combination of cash and stock offer.

The deal is expected to strengthen the company's focus on providing software solutions to the banking, financial services and insurance industries (BFSI).

Commenting on the acquisition, Arun Jain, chairman, Polaris said, "It is a pedestal to create a multinational corporation which would deliver the best software solutions worlwide." He added that the purchase of Data Inc would put pressure on margins in the first year as "margins in the US traditionally tend to be lower. So ther would be some dip in terms of total margins, but we expected to be able to put on par with Polaries over the next 12 months."

 

With this acquisition, Polaris will be able to increase its client base and accelerate the setting up of its global development centre. This falls in line with the objective of the company to make an initial public offering (IPO), said a press release issued by the company.

Data Inc, headquartered in New Jersey, develops software for the BFSI sectos. Established in 1983, it commenced its operation in the US and has eventually entered the UK and the Indian markets. Clientle for the company include Chase, Merrill Lynch, UBS, Goldman Sachs and Bell Atlantic.

Polaris will secure sharholers' approval on May 24 to raise upto $ 150 million through the issue of American depository receipts (ADRs) golbal depository receipts (GDRs) or any other securities at its annual general meeting. A company spokesperson said this was an enabling resolution with the validity for the issue of ADRs or GDRs being valid for a year and for a perferential equity issue to investors being valid for 90 days.

For 2000-01, the company is projecting a turnover of Rs 250 crore, which represents a growth of 70 per cent. The company ended 1999-2000 with a turnover of Rs 160.29 crore, up 165 per cent from the previous year.