Mergers & Alliances News: 25/06/09

 

EDUCOMP ENTERS 50:50 JV WITH UK-BASED PEARSON
Mahima Puri & Paramita Chatterjee, New Delhi

 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 Singapore on Tuesday, a person familiar with the development said. He added both the companies are likely to invest an additional $20 million in the next five years in the new business. When contacted, Educomp’s spokesperson declined to comment.

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 India and China. The Indian JV offers study content for professional courses, while the Chinese JV was for K-12 business initiatives.

SUNGARD MULLS ACQUISITION IN INDIA
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 India.

"We are always looking for opportunities for that will help us to expand our portfolio solution and acquire incremental customer base," SunGard India's Chief Operating Officer Akila Krishnakumar said here.

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 India would be in the areas SunGard has expertise, but did not divulge any further details.

"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, Bangalore
Mint  Deccan Herald  The Times of India (Bangalore edition)  

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 Nepal, which will be re-branded as CG Manipal Schools, a TutorVista official said in an interview.

The Chaudhary Group is currently in the business of snack foods and beverages, automobile distribution and real-estate in Nepal. “There is a strong, unmet demand for quality education in Nepal. Manipal K-12 Education required a local partner to extend this education expertise into schools there,” founder and CEO of TutorVista, K Ganesh, said. ManipalK-12 Education is concerned with providing technology solutions as well as building and acquiring management of schools. This alliance will help TutorVista to expand outside India.

Based in Bangalore, TutorVista services around 10,000 students, primarily in the US, through over 800 Indian teachers. In order to establish its presence in the domestic market, TutorVista had acquired e-learning curriculum content provider Edurite Technologies in 2007. In February this year, Manipal Education and Medical Group (MEMG) invested around $15 million fresh into TutorVista, ET had reported earlier. As a result , Edurite Technologies was rebranded as Manipal K-12 Education.

“Internet-based education has worked very well in the US, but the internet and PC penetration in India and the mindset to be tutored online is very low. This is why we have used a hybrid model for the Indian market, where we combine technology with class-room teaching,” Ganesh, said.

INDIAN FIRMS ACQUIRE 143 US COMPANIES, CREATE 30,000 JOBS
Washington
Deccan Herald

Indian companies made 143 acquisitions across various sectors in the United States over the last two years, bailed out many companies on the brink of closure and created some 30,000 jobs, according to a seminal new study.

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 US - Direct Investment by Indian companies in 2007-2009" at a function at the East West Centre.

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 US being the largest economy in the world was naturally a key economic partner for India, she said pointing out the growing two-way investment between both countries.

FICCI President Harsh Pati Singhania and Secretary General Dr. Amit Mitra also spoke about the developing economic ties between India and the US and the numerous opportunities for further cooperation.

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 US to strong economic growth, and easy availability of debt finance for companies.

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 US.

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, India's largest IT services provider Tata Consultancy Services (TCS) beat business process outsourcing (BPO) majors like Genpact and IBM to acquire the back-office operations of Citigroup for $505 million.

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, India's two top firms rivaled each other to buy UK-based Axon, one of the major SAP consulting players with about 2,000 consultants. In August, Infosys made a 407 million pounds bid for Axon. A month later, (in September), Noida-based HCL Technologies offered an 8.3 percent higher bid at 650 pence a share in cash to acquire Axon Group.

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 United States as well as its offering of services through a $600 million acquisition of Infocrossing, a US-based infrastructure management services provider.

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 US.

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 Missouri residents.

Before Infocrossing, Wipro has made eight IT acquisitions primarily to gain access to new markets in Europe and the United States. However, the company typically paid about $50 million for each of those acquisitions.

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 California, Georgia, Illinois, New Jersey, North Carolina, Iowa and Texas and has over 1,300 employees.

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 India and the rest in the US.

Following the acquisition, Ebusinessware was rebranded as MGL Finance and all MGL businesses catering to financial services clients brought under the same.