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Investment to be made through Sonata Europe

GAINING MARKET IN EUROPE: Mr B Ramaswamy (left), President and Managing Director, Sonata Software, and Mr Heinz Kreuzer, Group CIO of TUI and Managing Director of TUI InfoTec, at a press conference in Bangalore on Wednesday. - G. R. N. Somashekar

Bangalore, Sept. 27

Sonata Software Ltd is acquiring a 50.1 per cent stake in the Hannover-based TUI InfoTec for Rs 106 crore (18 million). TUI InfoTec is the IT outfit of European travel and tourism conglomerate TUI Group.

Mr B. Ramaswamy, President and Managing Director, Sonata, said the deal would enable the company to achieve its objective of entering new markets such as Germany, besides expanding presence in Europe. The deal would be subject to clearance from the German anti-trust authorities, which is expected in about a month's time, he said.

The company has set up a special purpose vehicle - Sonata Europe, through which the investments will be made in TUI InfoTec, he said. Sonata has cash and cash equivalent of Rs 60 crore and the debt-free company expects to raise the required funds through short-term borrowings to fund the buy-out, Mr Ramaswamy said.

Leveraging on Sonata's offshore capabilities, TUI InfoTec would offer IT infrastructure management services and IT software services to the European market and would remain a preferred supplier to the TUI Group, he said. The joint venture will have the exclusive rights for offering IT services in markets such as Germany, Poland, Austria and Switzerland. Further, there is a revenue commitment from the travel major for five years till 2011, Mr Ramaswamy added.

TUI InfoTec posted a net profit of 11 million on revenues of 130 million for calendar 2005. It also has two subsidiaries in Travel BA.Sys and Accon RVS, which provide a technology platform and back office services for travel agencies. The remaining stake of 49.9 per cent would be held by TUI AG.

Sonata will retain all the 432 employees of TUI InfoTec, Mr Ramaswamy said adding that the results would get consolidated from the third quarter onwards. TUI is an existing client of Sonata.

It also has ongoing outsourcing contracts with other Indian vendors such as Wipro Technologies and WNS. Sonata shares closed five per cent higher at Rs 32.35 on the Bombay Stock Exchange on Wednesday.

Mr Heinz Kreuzer, Group CIO of TUI and Managing Director of TUI InfoTec said, "we believe Sonata's delivery capabilities will enhance our offerings and enable us to win new business".

The joint venture would also look out for business outside of the TUI Group.

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