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Mastek acquires STG for $29 mn

BS Reporter  |  Mumbai 

The Mumbai-based IT solutions and services company Mastek has acquired the US-based Systems Task Group (STG) International, an IP-based enterprise solutions provider to the North American property and casualty (P&C) insurance industry.
Mastek bought the company through its wholly owned US subsidiary, MajescoMastek, in an all-cash deal worth $29 million (around Rs 116 crore).
This acquisition is the second such initiative by Mastek in the current financial year. Under terms of the agreement, MajescoMastek will hold 100 per cent stake in STG. While 85 per cent of the total consideration is payable at the time of acquisition, the remaining will be linked to ongoing performance and paid by way of earn-outs.
The acquisition is being funded through internal accruals and bank borrowings.
The buy will strengthen Mastek's presence in the non-life insurance segment and expand the opportunity pipeline in the overall insurance vertical. STG, headquartered in New York, has a fully integrated offshore competency centre in Mumbai (India).
The company has about 350 employees with significant P&C insurance domain expertise and a robust customer base that includes over 35 small and mid-sized American insurance carriers.
The P&C segment is a high potential market, with IT spending by P&C insurers expected to cross $20 billion by 2010 from $16 billion in 2007.
Sudhakar Ram, Chairman and MD, Mastek, said, "This acquisition is another important step in expanding our presence in both the life and non-life segments of the high opportunity US insurance market."
Post the buyout, STG will be known as STGMastek. The integration is likely to be completed in about 90 days and its contribution reflected in Mastek's consolidated performance partly in FY08 and fully in FY09.

First Published: Tue, March 11 2008. 00:00 IST