Mergers News: 03/06/09

 

SMES CORNER 40 PERCENT OUTBOUND M&AS IN ’09
Ravi Teja Sharma, New Delhi
The Economic Times (Delhi edition)

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 India, 25 outbound M&As have taken place in the first five months of 2009 of which 10 are by SMEs. Some of the firms such as Headstrong, Cosmo Films, Geodesic, Steer Engineering, iYogi and DiacriTech have struck deals in the $20-50 million range to expand their reach in newer markets and improve revenues. “Interestingly, most of these deals by mid-sized companies are in the technology space,” says Venture Intelligence CEO Arun Natarajan.

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 US and European markets and there is no short term recovery in sight. “In this scenario, the motivation for Indian companies to acquire foreign companies are many—valuations are at rock bottom, and acquisitions also help access newer markets,” says Deepak Srinath, director at investment banking firm Viedea Capital Advisors.

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, HITACHI ARM IN TIE UP
Chennai/Hyderabad
Business Standard

Intense Technologies Limited, a Hyderabad based enterprise agility software products company, and electronics major Hitachi’s services oriented storage solutions arm Hitachi Data Systems Corporation have collaborated to jointly market and offer long-term content archival and retention solutions to enterprises.

Intense offers document management solutions (DMS) that complement Hitachi’s storage devices and address complexities and challenges posed by growing compliance needs across industries. “As our technology partner, Hitachi Data Systems will help us further extend the solution scope and application breadth of our process and knowledge agility offering – iECM (intelligent Enterprise Content Management) Suite,” CK Shastri, managing director of Intense Technologies, said in a release on Tuesday.

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 India to nurture the software solutions of Wonderware.

“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.