HCL TECH HOPES TO CLOSE FIVE BIG M&E DEALS BY YEAR END
Kirtika Suneja
Business Standard
Delhi based HCL Technologies expects to sign around the five deals in the media and entertainment (M&E) space. Talks are on with four global companies and one Indian firm, and HCL plans to close these deals, mostly each between $50-200 million (Rs 240-950 crore) by year-end.
The company is looking at opportunities in this area with large media conglomerates, two of which are based out of Europe.
COMPANIES OPT FOR COST REDUCTIONS & EFFICIENCY IMPROVEMENTS
Rajiv Memani
The Economic Times
With the global economy in the grip of a downturn, corporate decision-makers have shifted their attention to survival in a tough market. However, in doing so, they risk forgoing those growth opportunities which often present themselves during the times of a slowdown. As organic growth in revenues is difficult to come by and profit margins are constantly under pressure, companies have been busy with much-needed cost reductions and efficiency improvements.
But is this enough to gain real competitive advantage and find the opportunities in adversity? Clearly, given the fact that most people are in business for the long-term , there must be a balance between the fight for survival and the quest for growth. A carefully identified and structured Merger & Acquisition (M&A ) transaction can accelerate growth by providing access to new markets, customer segments, technologies, human resources and economies of scale.
The current M&A activity, or the lack of it, needs to be viewed in this context. According to Bloomberg estimates , Indian M&A volumes have dropped from USD 42bn in 2007 to USD 33 bn in 2008 and just USD3.7 bn in the first three months of 2009. This is a worldwide phenomenon. Global M&A volumes are down to USD 427.4 bn in Q12009 from USD 2498 bn in 2008 and USD 4058 bn in 2007.
The reasons range from a shift in focus from growth to survival, higher risk-aversion , poor or no availability of capital for financing acquisitions, reduced private equity appetite etc. However, this really is the time for corporate strategists to consider M&A , as valuations are modest and an increasing number of companies are looking to consolidate by divesting non-core or non-performing assets and businesses.
In a recent Ernst & Young survey of 121 finance professionals in
Some recent M&A transactions in India where companies appear to have cashed in on low valuations include American Tower Corporation's acquisition of Xcel Telecom; TCS buying the BPO division of Citigroup and Sodexho's acquisition of Radhakrishna Hospitality. But generally, these have been few and far between.
A majority (63 percent) of our respondents felt that the slowdown will result in a consolidation in their sectors. Interestingly, the majority (58 percent) of our respondents in the above-mentioned survey told us that they would consider M&A as a prudent strategic decision for business growth during the slowdown. Yet, M&A volumes hardly reflect this conviction.
Non-availability of capital has been the biggest challenge. While banks have been reeling under a global liquidity crunch, private equity investments have dried up. Also, the Indian M&A boom had been driven by crossborder transactions, which have become much fewer due to lack of capital and increased caution. Further, market uncertainty has resulted in a widening of the bid/ask spread, where bridging the gap between buyer and seller expectations has made deal closures difficult.
Consequently, we are beginning to see some significant changes in the way transactions are financed and executed . With lower leveraging opportunities , promoter contribution has become important and banks may require additional comfort from borrowers . This will significantly reduce highly leveraged buyouts. Maximum debt levels are likely to be between 2.5-3 X EBITDA (post acquisition) vis-à-vis levels of 4-5 X EBITDA, structured through multiple levels of senior , subordinate, quasi and unsecured debt instruments.
Some of the solutions which can be considered include cashless transactions via the share-swap and asset swap route, delayed payment schemes, "earn-out" strategies, upside sharing and minority sales. A large number of all-share mergers could happen. Also, sovereign wealth funds, who continue to be more optimistic, can be considered as an alternate source of finance. Generally, with acquisition financing a challenge, big-ticket transactions may be fewer.
The author is Country Managing Partner, Ernst & Young
HAS THE TEMPLATE FOR A SUCCESSFUL JV CHANGED?
Arati Menon Carrol
The Economic Times
A year and a half ago, against the backdrop of a thriving Indian economy and an automotive market on overdrive, the Hero group announced a Rs 4,400 crore joint venture partnership with Daimler Trucks, a division of Daimler AG, giving Hero the opportunity to enter the commercial vehicles segment in
News of failed JVs has been doing the rounds; Britannia-Fonterra, TVS Group-Wabco and UTI-Shinsei Bank are among those who are either reviewing or have called off partnerships. Larsen & Toubro (L&T )'s plans to enter the non-life insurance business through a JV with US-based Travelers Insurance have also reportedly fallen through and engineering and construction company Punj Lloyd is exiting its two-year real estate business JV; chairman Atul Punj has admitted that a bad real estate environment prompted this decision.
So has the global economic meltdown found its latest victim? Strangely enough, industry pundits say this is a false alarm; partners aren't necessarily pulling the plug on JVs just so they can shore up revenues or cut costs. "If JVs are not working out it's less a sign of the times and more a factor of partners going their separate ways over the inability of the Indian partner to match investment dollar for dollar or a mismatch in business strategy," says Akil Hirani, managing partner at top law firm Majmudar & Co.
Ranjan Biswas, partner and national director India, transactions advisory services at Ernst&Young says a weak global economy does put pressure on JVs but not necessarily enough to break large numbers of them, but adds that for a joint venture to stand up to the event, both parties need to have thrashed out the harder parts of their partnership right at the start.
Hirani actually believes the opposite might be true. "A lot of Western multinationals are looking to beat the blues in their jurisdictions by partnering with Indian companies to leverage existing manufacturing or distribution networks in
IT training solutions provider Aptech is betting big on the Latin American market by entering into a JV with the Falgo group to set up IT training centres in
So global recession may not have played spoilsport on this front but what it is having a significant effect on, says experts, are the foundations upon which partnerships are built. "The global recession is actually a great leveler. Traditionally the Indian promoter has always had his eye on taking the lion's share of profits by putting in the least amount of money.
So, has the template for a successful JV changed? Everyone agrees that the transparency factor will be key. Bajaj offers his advice: "If you have the right balance between aggression and focus on profits and follow similar corporate governance standards you're on the right track." Everyone agrees that there's likely to be less tip-toeing around common irritants like management and financial control and exit strategies.
Crucial issues that were just left open in the hope that they would be solved later on will now likely be knocked around at the outset. At the end of the day though, says Biswas, every JV has a shelf life. "The average life expectancy of a
EDUCOMP ENTERS 50:50 JV WITH UK-BASED PEARSON
Mahima Puri & Paramita Chatterjee,
Financial Chronicle The Asian Age The Hindu Business Line DNA
Education software solutions provider Educomp has entered into a 50:50 joint venture (JV) with the UK-based publishing house Pearson, said a person with direct knowledge of the development. The JV will offer vocational education business leveraging Educomp’s learning network and Pearson’s education content. An announcement is likely on Wednesday.
Pearson would be pumping in $17.5 million in the JV and an agreement has been signed in
The JV will provide Educomp access to Pearson’s content on vocational education. For instance, Pearson’s content on Spoken English alone has 3.5 million users globally. Besides, Educomp would be able to use Pearson’s content on vocational training in sectors such construction, automobiles and hospitality. "The JV will benefit both the companies tremendously," said a senior executive of Educomp, who asked not to be named.
Pearson will be able to tap the vocational education market through Educomp’s network. Pearson, an international media company, with businesses in publishing, education and business information, plans to aggressively expand its footprint in the Indian market. Recently, it reportedly picked up a strategic stake in TutorVista, a Bangalore-based e-learning firm for about $15 million.
In May 2008, Educomp had set up two JVs with Raffles Education Corp, a $2.78-billion private education group in the Asia Pacific region, covering
SUNGARD MULLS ACQUISITION IN
Mumbai
The Economic Times
Having acquired 160 companies globally since inception in 1982, Pennsylvania-based software and services firm, SunGard, today said that it was looking for an acquisition in
"We are always looking for opportunities for that will help us to expand our portfolio solution and acquire incremental customer base," SunGard
The largest privately held business software and services company on the Forbes list of private businesses, SunGard, had recorded USD 5.6 billion revenue in 2008. Only two percent of that came from the Asia-Pacific region.
SunGard provides software and processing solutions for financial services, higher education and the public sector.
Krishnakumar said that the acquisition in
"We are actively looking for acquisition. When it will happen and what will be the deal size -these are all difficult to answer now," she said.
TUTORVISTA TIES UP WITH CHAUDHARY GROUP
Peerzada Abrar and Sarah Jacob,
Mint Deccan Herald The Times of India (
Online education services company TutorVista has formed a joint venture with Nepal-based Chaudhary Group, a $250-million business group. The joint-venture company is in the final stage of acquiring the management of a chain of schools in
The Chaudhary Group is currently in the business of snack foods and beverages, automobile distribution and real-estate in
Based in
“Internet-based education has worked very well in the
INDIAN FIRMS ACQUIRE 143 US COMPANIES, CREATE 30,000 JOBS
Indian companies made 143 acquisitions across various sectors in the
In 2007-08 alone, 94 deals between the range of $0.8 million and $1,005 million were concluded with the disclosed value in 55 deals totalling $4,432 million, according to the joint study released by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Ernst and Young.
In 2008-09, Indian companies were involved in 49 US-bound acquisitions. Of these, deal values were disclosed in 24 cases and their value totalled $960 million. The size of the deals were in the range of $0.70 million and $172 million, the report noted.
Indian Ambassador to the US Meera Shankar released the study titled "India Contributes to Employment, Capital Growth and Tax Revenues in the
Speaking of a transformation that the India-US bilateral relationship had witnessed in recent years, Shankar highlighted the complementarities and convergences in the relationship.
The
FICCI President Harsh Pati Singhania and Secretary General Dr. Amit Mitra also spoke about the developing economic ties between
The study shows that IT & ITeS (information technology and information technology enabled service), consumer products, pharmaceutical and manufacturing are the key sectors where companies are active in outbound acquisitions.
However, the IT & ITeS sector is the sector where a majority of the deals took place. The IT & ITeS sector, in fact, accounted for 50 percent of the total number of deals in 2007-08 and 40 percent of the total number of deals in 2008-09.
The report attributed the rise in Indian outbound investments to the
Several Indian multinationals are still looking at acquiring US companies, despite the economic downturn, which has raised the cost of overseas acquisitions.
INDIAN IT'S TOP ACQUISITIONS
The Times of India
Indian IT is facing challenging times with its biggest market US reeling under economic slowdown and its largest vertical BFSI sector in a global turmoil. However, the tough times has not decreased the industry's acquisition appetite. With falling valuations and market cap due to global recession, analysts have been calling the time ripe for acquisitions.
Indian companies too seem to be in a mood to cash on the opportunity and expand their presence across the globe, especially US, as a recent report shows. According to a joint study by Ernst & Young and FICCI, during the two consecutive financial years, 2007-08 and 2008-09, Indian companies made 143 acquisitions across various sectors in the
In 2007-08 alone, 94 deals were concluded (the value of the deal was disclosed in 55 cases and stood at a total of $4,432 million). The size of the deals was between the range of $0.8 million and $1,005 million.
The Indian IT industry too cashed on the opportunity and made some crucial acquisitions during the period. Here's looking into the key acquisitions made by Indian IT companies over the past few months.
Wipro acquires Citi Technology Services
In December 2008, Wipro Technologies, the global IT services business of Wipro has acquired Citigroup's subsidiary, Citi Technology Services (CTS) formerly called Citos for $127 million. CTS, the technology and infrastructure outsourcing arm of Citi provides information technology services and information to Citi entities worldwide.
The India-based Citi Technology Services (CTS) provided IT infrastructure management and application development services to Citigroup. The acquisition gave Wipro access a pool of 1,650 employees who are on the payroll of CTS and another 400 contractual employees. The new entity has historically operated at margins similar to or greater than Wipro, according to Wipro’s management.
TCS acquires Citigroup Global Services
In October 2008,
The acquisition broadens TCS's portfolio of end-to-end IT and BPO services in the global banking and financial services (BFS) sector. With Citigroup Global Services under its fold, TCS became the second-largest BPO player globally, after IBM.
Along with the sale, Citi also signed an agreement with TCS to provide process outsourcing services worth $2.5 billion over the next nine-and-and-a-half years. Citi will be the first global bank to have outsourced its entire banking processes, including core banking operations, to a third party.
HCL-Axon deal
For the first time in Indian IT industry,
Infosys Technologies, which had first made the bid for Axon in August, said that it won’t raise its offer price and thus moved out of a possible bidding war. HCL's bid was considered expensive when it was announced and the worsening business environment led to further skepticism.
Wipro acquires Infocrossing Inc
In August 2007, Wipro expanded its presence in the
The $232.44 million New Jersey-based Infocrossing, which was founded in 1985 and its wholly-owned subsidiaries provide IT outsourcing solutions to companies, institutions and government agencies in the
Just two months after the acquisition, Wipro Infocrossing won a $275 million multi-year outsourcing deal to provide BPO and IT services to Missouri HealthNet Division, an agency run by the state government to provide health care services to
Before Infocrossing, Wipro has made eight IT acquisitions primarily to gain access to new markets in Europe and the
3i Infotech buys Regulus Group
In the year 2008, Global information technology company, 3i Infotech acquired US-based Regulus Group and its subsidiaries, an independent remittance and document processing services provider.
The cost of acquisition was $80 million with an additional consideration of up to $20 million which was linked to performance parameters. The company acquired 100 percent stake in Regulus Group including its products, trademarks and brands.
California-based Regulus handles over 2.1 billion paper and electronic transactions annually. It has a nationwide network of 10 processing centres in
Accentia Technologies acquires DenMed Transcription
In 2007, Mumbai-Based business process outsourcing company Accentia Technologies acquired Oregon-based medical transcription services provider DenMed Transcription. DenMed Transcription was acquired for $66 million. DenMed had revenues of $1.5 million.
Accentia director Pradeep Viswambharan said that the acquisition would add to the company’s portfolio in the healthcare receivable cycle management.
DenMed provides services including Electronic Medical Record (EMR) solutions, System-customized EMR exchange, Electronic record conversion and transfer.
Accentia Technologies buys GSR Physicians Billing/GSR Systems
In 2007 again, Accentia Technologies acquired two more US-based healthcare BPOs. The company bought Florida-based GSR Physician Billing Inc and GSR Systems Inc in cash-cum stock deals.
The deal value was estimated to be $63 million. The GSR group companies reported revenues of $3 million each. The company hoped to add nearly $10 million to its topline by way of these acquisitions.
GSR/Physician's Billing Service provides billing and collections services, coding consulting, and medical software. The company was formerly known as GSR Systems, Inc. GSR/ Physician's Billing Service was founded in 1996 and is based in Cooper City, Florida.
Mascon Global buys Jass & Associates Inc/SDG Corporation
New Delhi-based IT services firm Mascon Global (MGL) acquired New York-based Ebusinessware Inc last year, which offers IT solutions and consulting to financial services firms, for about $35 million.
Ebusinessware provides technology solutions and services in areas like credit risk management, market risk management, credit derivatives, business process management and reference data management.
The company had then said that acquisition will bring in additional revenues of $60 million. Ebusinessware has over 1,100 employees, of which approximately 750-800 are based in
Following the acquisition, Ebusinessware was rebranded as MGL Finance and all MGL businesses catering to financial services clients brought under the same.
INDIA INC'S 5 LARGEST US-CENTRIC DEALS IN 2 YEARS
The Economic Times
The year 2007 and the first few months of 2008 witnessed significant volumes in Indian outbound deals. Indian companies, which traditionally focused on organic growth or at best inorganic growth through domestic mergers and acquisitions (M&As), set foot in many international markets through acquisitions or businesses, and earned greater acceptance as global market players.
In a joint report on 'Direct investments in the US by Indian enterprises', Ernst & Young and FICCI have considered India's outbound US centric deals during the period April 2007 to March 2009 and analysed its trajectory and trends. During the two consecutive financial years, 2007-08 and 2008-09, Indian companies made 143 acquisitions across various sectors in the
In 2008-09, Indian companies were involved in 49 US-bound acquisitions. Of these, deal values were disclosed in 24 cases and their value totalled $960 million. The sizes of the deals were in the range of $0.70 million and $172 million.
1. Wipro acquires Infocrossing
Acquirer: Wipro Ltd
Target: Infocrossing Inc
Sector: Software
Date: August 2007
Deal Value: $548 million
Wipro Technologies, the IT services arm of Wipro Ltd, acquired Infocrossing Inc, a US-based provider of IT infrastructure management, enterprise application and business process outsourcing services. The acquisition of an acknowledged industry leader broadened the data center and mainframe capabilities of Wipro Technologies to uniquely position it in the remote infrastructure management space.
2. Firstsource Solutions buys MedAssist Holding
Acquirer: Firstsource Solutions Ltd
Target: MedAssist Holding Inc
Sector: Commercial Services
Date: August 2007
Deal Value: $330 million
Firstsource Solutions Ltd acquired MedAssist Holding Inc for $330 million. At that time, Firstsource said in a statement that this acquisition presents significant synergies for the company. It already has a presence in the
3. Reliance Comm acquires Yipes Communications
Acquirer: Reliance Communications Ltd
Target: Yipes Communications Inc
Sector: Telecommunications
Date: July 2007
Deal Value: $300 million
The acquisition of US-based Yipes Holdings, the leading provider of managed ethernet services, by Reliance Communications was the latter's first major overseas acquisition. At that time, Yipes, headquartered in
4. 3i Infotech buys Regulus Group
Acquirer: 3i Infotech Ltd
Target: Regulus Group Llc
Date: April 2008
Deal Value (USD Million): 80
Global information technology company 3i Infotech in April 2008 announced the acquisition of US-based Regulus Group and its subsidiaries, an independent remittance and document processing services provider. The cost of acquisition was $80 million with an additional consideration of up to $20 million, which was slated to be linked to performance parameters.
5. Accentia Technologies acquires DenMed Transcription
Acquirer: Accentia Technologies Ltd
Target: DenMed Transcription Service
Date: December 2007
Deal Value (USD Million): 66
Accentia Technologies acquired Oregon-based medical transcription services provider DenMed Transcription. DenMed Transcription was acquired for $66 million.
6. Accentia Technologies buys GSR Physicians Billing/GSR Systems
Acquirer: Accentia Technologies Ltd
Target: GSR Physicians Billing Inc/ GSR Systems
Date: July 2007
Deal Value (USD Million): 63
Mumbai-Based business process outsourcing company Accentia Technologies acquired US-based healthcare BPO companies. It bought Florida-based GSR Physician Billing Inc and GSR Systems Inc and Oregon-based medical transcription services provider DenMed Inc in cash-cum-stock deals.
7. Mascon Global buys Jass & Associates Inc/SDG Corporation
Acquirer: Mascon Global Ltd
Target: Jass & Associated Inc/SDG Corporation
Date: March 2008
Deal Value (USD Million): 55
IT services provider Mascon Global acquired two US-based companies for $55 million. The board of directors approved the acquisition of Jass & Associates Inc and SDG Corporation for a consideration of $55 million, of which $35 million was paid in cash and the remaining through issue of global depository receipts (GDRs).
BT, CERT IN SECURITY MOU
New
The Times of
British Telecom (BT), a providers of communications solutions and services operating in 170 countries, and Indian Computer Emergency Response Team (CERT-In), an organization established under the Ministry of Communications & Information Technology, Government of India, have signed a Memorandum of Understanding (MOU) to enhance the overall security of the computing environment in the country.
The MOU was signed by Sudhir Narang, BT India Managing Director, and Director, CERT-In, Dr. Gulshan Rai.
Commenting on the significance of the MOU with CERT-In, Sudhir Narang, BT India Managing Director said, “BT is committed to help organizations around the world and in
As a part of the MOU, both BT and CERT-In have identified a common goal to work together to address the increasingly complex problems associated with computer security and computer-related crime in
EDUCOMP, UK CO IN JV
New
The Economic Times (Mumbai edition)
Education software solutions provider Educomp has entered into a 50:50 JV with the UK-based publishing house Pearson, said a person with direct knowledge of the development. The JV firm will offer vocational education business leveraging Educomp’s learning network and Pearson’s education content. Pearson would be pumping in $17.5 million in the JV and an agreement has been signed in
ICRA OPEN TO ACQUISITIONS, AIMS TO BOOST NON-RATING REVENUE
Kolkata, June 22, 2009
The Economic Times The Times of India
Rating major, ICRA has said it is open to acquisitions in the KPO and IT space to boost its non-rating revenues in the coming years.
"We are open to more acquisitions in KPO (Knowledge Process Outsourcing) and IT space if we get right offers. In March, we had acquired US-based IT company of Sapphire Group through our analytics subsidiary," ICRA vice-chairman and group CEO P K Choudhury said.
Sapphire was a USD 1.5 million revenue company and was acquired for around USD 1 million.
Choudhury said the company is aiming to increase its non-rating revenues to 50 percent of the total group earnings by 2011-12.
"Currently, rating revenues are 60 percent and 40 percent (comes) from non-rating activities," he said.
ICRA group revenue for 2008-09 was Rs 149.81 crore, of which rating services was Rs 88.51 crore.
ICRA is not aiming for any big-ticket acquisition and is eyeing value-based companies in knowledge domain.
The consolidation with Sapphire would be complete by September, ICRA Techno Analytics Ltd (ICTEAS) Managing Director Prateep Guha said.
ICRA would shift development activities of Sapphire in Egypt and Russia to its Kolkata office.
"We are planning to introduce business intelligence software branded as Turf View Business Intelligence for both Indian and overseas market," Guha said.
This product would cater to sectors like pharma, FMCG and consumer durables and offer value on the data captured by the ERP solutions.
ICRA group's non-rating revenues mostly come from three subsidiaries, ICRA Management Consultancy Services Ltd, ICRA Techno Analytics Ltd (ICTEAS) and ICRA Online.
Choudhury, speaking about the rating of corporates in the current economic scenario said, now downgrading had reduced, "but it will be another year before we can see substantial upgrades of ratings".
INFY EYES MID-TICKET BPOS IN US, EUROPE
Surabhi Agarwal, New Delhi, June 22, 2009
The Financial Express
After the failed effort to acquire UK-based SAP consulting major, Axon Plc, which was eventually bagged by HCL Technologies for ?441 million in December last year, India?s second largest software exporter, Infosys Technologies is looking at a string of mid-ticket acquisitions in the US and the European market. Business Process Outsourcing (BPO) is one of the areas where the company is actively scouting for acquisitions.
?BPO is one of our target areas for acquisition. We are also looking at companies in the consulting and the infrastructure management space,? said a company official.
However, the official added that the company was not looking at big-ticket acquisitions and has an outlay of $100-$200 million for deals in each of these services. Infosys had cash and cash equivalents of over $2 billion as on March 2009.
According to sources in the company, Infosys had set a target of generating over $1-billion revenue from its BPO unit. However, the current economic crisis made its plans goes awry. Infosys BPO, which is a wholly owned subsidiary of Infosys Technologies, reported revenues of $316.2 million for the financial year 2008-09.
?Infosys BPO is strong in the telecom and financial services verticals. Therefore, companies which can bolster our offering in this space and have a unique platform or IPR to offer transaction based services will be a good fit,? said the official. In an effort to derive better margins and reduce the dependency on headcount, majority of India?s top BPOs are trying to move away from voice-based offerings as they increase their focus on transaction-based services and experiment with newer models of pricing like output-based pricing.
However, Infosys is not looking at the domestic market for acquisitions. ?India-based entities can only give us scale, which we can easily generate by upping our headcount. We are looking at companies that can give us the front-end in terms of markets and clients. The offshore and the offshore mix can later be re-balanced,? he added.
In an interview earlier this month, Amitabh Chaudhry, CEO of Infosys BPO had said the company is looking at buying outsourcing firms in the US and Europe
HP AND ALCATEL-LUCENT FORM GLOBAL
New
Business Standard The Economic Times Mint
Global technology majors HP and Alcatel-Lucent have signed a relationship agreement to form a 10-year global alliance to jointly market solutions and capabilities that enable end-to-end transformation for service providers and enterprises.
Through the alignment of their offerings and common solutions, HP and Alcatel-Lucent plan to create a ‘one-stop shop’ to empower enterprises to effectively create and manage truly integrated communication environments.
The companies plan to launch a global go-to-market programme to transform communication networks into converged, next-generation infrastructures besides offering services to manage the new and existing infrastructures for customers looking for flexible sourcing options.
“IT and telecom are coming together in an unprecedented way and I am delighted to see how we can speed up innovation in our industry,” said Ben Verwaayen, Alcatel-Lucent’s chief executive officer. “I am also confident that HP will deliver Alcatel-Lucent best-in-class solutions in terms of performance and cost for our IT needs.”
HP and Alcatel-Lucent also plan to create a joint go-to-market initiative to provide communications solutions to mid- and large-size enterprises and public sector organisations.
Alcatel-Lucent’s products in IP telephony, unified communications, mobility, security and contact centers will be integrated with HP IT solutions. These joint solutions are planned to be offered to enterprises through HP resellers or as managed services
SOFTPRO SYSTEMS ACQUIRES 100 PERCENT STAKE IN SA'S FIRM
The Asian Age
IT solutions provider Softpro Systems has acquired 100 percent equity stake in South Africa based Cura Risk Management software for $ 19 million in an all cash deal. The move is likely to help the Indian company grow six fold to over Rs 60 crore by the end of this fiscal.
“The acquisition is our first step towards the turnaround of our fledgling company. We hope to become a $ 200 million company in the next five years,” said G Bala Reddy, Chairman& Managing Director, SoftPro.
Cura is a $ 8 million company which provides integrated software solutions addressing the Governance Risk & Compliance (GRC) requirements. Soft pro will pay $ 16 million upfront and the rest in the next three years based on performance of the acquired company.
The
The Company had announced last week that it would raise Rs 43.20 crore through preferential issue of convertible warrants.
MOSYS INC ACQUIRES PRISM CIRCUITS
The Times of India (
MoSys Inc, a Santa Clara-based provider of high-density system-on-chip (SoC) memory intellectual property (IP), has acquired all the assets and business of privately held Prism Circuits Inc., which supplies high data rate parallel and serial interface IP. MoSys has paid approximately $13.5 million at the closing and will pay an additional earn-out amount of up to $6.5 million after the first anniversary of the closing date, subject to certain terms. The acquisition includes an engineering design center in
CCI BLESSING TO BE MUST FOR M&AS, REJIGS
Gireesh Chandra Prasad & Suchetana Ray, New Delhi, June 8, 2009
The Economic Times (Bangalore edition)
All mega mergers and corporate restructuring deals in the country will soon require the competition regulator’s approval as the government has set a three-month deadline for introducing such a regulation.
“Certain areas still need attention, which is why the government hasn’t notified merger regulations so far. In these 100 days, we’ll be able to push them through,” corporate affairs minister Salman Khursheed said. Merger regulations are procedures that the Competition Commission of India (CCI) will have to follow while regulating deals.
Once enforced, competition law provisions on mergers would require all mega deals—domestic, cross-border and totally offshore—to seek the approval of CCI. The regulator can ask the parties involved to modify or keep certain businesses out of the deal to ensure fair competition in the market.
The merger regulation is likely to be implemented prospectively, that is, past deals would not require CCI’s approval. For instance, proposed deals such as the Bharti-MTN merger will not need CCI’s approval if the boards of directors of both the companies approve the merger before these regulations are notified.
The competition regulator will scrutinise big transactions only as per the deal size prescribed in the law. Different threshold levels have been prescribed for individual and group companies depending on their exposure to domestic and overseas markets.
For instance, a domestic transaction in which the combined entity has Rs 1,000 crore in assets or Rs 3,000 crore in turnover will need approval of the CCI. In the case of a group of companies acquiring another one, the threshold increases four times.
CCI will scrutinise offshore deals only if the parties have a minimum market presence in India, called territorial nexus. In such cases, the foreign companies with business presence in India would choose to comply with Indian laws even if the transaction is offshore as they would not take a regulatory risk in an important emerging economy. The new rules for regulating offshore deals prescribe a threshold of Rs 500 crore in assets or Rs 1,500 crore in turnover for the combined entity.
The draft regulations prepared earlier had proposed that CCI approval was needed only if all the parties involved in the deal have an individual presence in India so that only deals that are relevant to competition in the Indian market are regulated. Otherwise, a small acquisition of, say, a coffee shop in a foreign country by a global MNC with an India presence will require CCI’s permission, which doesn’t appear logical.
CCI is now fine-tuning the draft merger regulations and is planning to introduce automatic approval for deals that are in public interest, a CCI official had recently said.
IBM TEAMS UP WITH
The Economic Times The Statesman
Global firm IBM on Thursday announced that it had teamed up with India Glycols Limited, a market leader in
As part of the agreement, IBM will host and manage the IT infrastructure, including IBM's state-of-the-art blade centre Nseries Storage System Solution, as well as the non-disruptive data migration and storage level data replication to its remote site, (IGL's plant) located in Kashipur, Uttarakhand.
The solution enables high performance, flexibility, scalability and efficient data management as well as effective total cost of ownership and return on investment for IGL, a company release said here today.
M&AS' COST TO INCREASE AS STAMP DUTY CEILING CEASES
Mumbai
Business Standard
The
State Finance Minister Dilip Walse-Patil, in his budget speech, proposed to remove the Rs 25-crore upper limit for stamp duty involved in M&As.
In
“Large-cap companies would be forced to shift their base to lower tax areas outside
The Confederation of Indian Industry (CII) also expressed concern over the removal of the ceiling on stamp duty. Maharashtra State Council Chairman Pramod Chaudhari said the restructuring of stamp duty on various agreements was a serious issue that required detailed study as this would have an impact on the industry to a great extent.
At present,
Officials of the state stamp duty and registration department, however, played down the impact of the stamp duty ceiling waiver, saying this was just a mere formality as such duty on any M&A deals in the state has never exceeded Rs 25 crore.
SMES CORNER 40 PERCENT OUTBOUND M&AS IN ’09
Ravi Teja Sharma, New
The Economic Times (
It’s not just the big boys of India Inc who are out shopping. With valuations becoming more realistic, SMEs too are acquiring companies abroad. According to Venture Intelligence, which tracks private equity and M&A transactions in
Headstrong, a financial services consulting firm that clocked $200 million in revenues last year, made two acquisitions in the last five months—Lyndian Data Services, a mortgage, BPO and technology services company and IX Partners, which offers ASP-based solutions to asset management firms. “If you have cash in the bank and a clear vision about where you want to be, it is a fantastic time to buy,” says Headstrong managing director Harsh Lohit.
For packaging film maker Cosmo Films the acquisition of US-based GBC Commercial Print Finishing was well-timed and one that came at the right price too, says Upal Roy, chief strategy officer at the Rs 650 crore (2008-09 revenues) company. “To some extent, valuations are more realistic today,” says Roy, who declined to reveal the size of the deal. Headstrong’s Lohit explains: “If the company we acquired was to be bought a year back, the price would have been at least 10-15x more,” he says.
Valuations have fallen steeply in the
For Geodesic the acquisition of Interactive Networks is expected to help expand its reach in the Latin American market. “Though we have been frugal in terms of acquisitions, the slowdown has further helped us in bettering the acquisition value in Geodesic’s favour,” says Geodesic managing director Kiran Kulkarni. He added that the deal, in the range of $10-15 million, was financed by a part of the $125 million it raised through FCCBs in January 2008.
The biggest problem that many Indian SMEs have faced over the last months is of raising money. While this might be the case, Roy of Cosmo emphasises that banks too are looking at the synergies of a deal. “The banks have become much more cautious and are scrutinising deals more closely than ever. But if we can answer their questions clearly, they are willing.” Cosmo Films financed the acquisition of GBC by internal accruals as well as debt.
INTENSE,
Chennai/Hyderabad
Business Standard
Intense Technologies Limited, a
Intense offers document management solutions (DMS) that complement
CMC, WONDERWARE IN RE-SELLER PACT
Mumbai
The Hindu Business Line
CMC, a subsidiary of Tata Consultancy Services, has entered into a re-seller agreement with Wonderware, part of the operations management division of Invensys. This partnership will facilitate the delivery of real-time operations management software solutions to customers, according to a press statement.
The two companies will jointly deliver solutions to industries such as food and beverage, power, water and waste water, facilities, transportation, upstream oil and gas, mining, and metals. CMC and Wonderware will set up a Centre of Excellence in
“This will augment CMC’s range of solutions for all the major verticals further ensuring alignment to CMC Ltd’s business focus and vision for the market,” said Ramanathan Ramanan, Chief Executive Officer of CMC. The CMC share was up by 3.78 percent to close at Rs 613.55 on the BSE.
POLARIS IN PACT WITH EGYPT CO
Chennai
The Hindu Business Line
Summit Technology Solutions, a Summit Holding company,
Through this partnership, Polaris has made its first major product go live in the
TAKE SOLUTIONS IN PACT WITH SOUTH KOREAN FIRM
Mumbai
Business Standard
Take Solutions, an international business technology firm, today said it has entered into an agreement with South Korea-based IL-Yang Pharma Company Ltd for providing investigational new drug (
The purpose of the
"Our reworked strategy toward focusing on the Asia Pacific region has received a major boost with IL-Yang Pharma," Take Solutions Vice President — sales, Life Sciences APAC, L Ramesh said.
The
Shares of Take Solutions were trading at Rs 38.30, up 8.50 percent on the BSE.
