The Hindu Business Line : SubexAzure to buy Canadian co for $165 m

At a glance
Syndesis operates in the services fulfilment and assurance space.
Its product portfolio help telecom operators offer on-demand, real-time activation of services such as IPTV, broadband among others for their end customers.
Syndesis is the seventh acquisition by Subex in the past seven years.

Bangalore Jan. 18

SubexAzure Ltd set a new acquisition record in Indian IT history on Thursday after it announced plans to buy out Canadian firm Syndesis Ltd in a $164.5-million (about Rs 730 crore) all-cash deal.

Early this fiscal, Subex had acquired Azure Solutions, a spin-off of British Telecom in a $140-million deal. Syndesis is the seventh acquisition by Subex in the past seven years.

Syndesis operates in the services fulfilment and assurance space. Its product portfolio help telecom operators offer on-demand, real-time activation of services such as IPTV, broadband among others for their end customers.

"The buy-out would not only enhance our product offering, but would also help get into the operational support systems arena, in which we aim to be a business leader," said Mr Subash Menon, Chairman and Managing Director, Subex. "Further, it also enhances our addressable market to about $4.5 billion by 2010, up from $2.5 billion in 2006," Mr Menon said.

The privately held profit-making Syndesis, which counts AT&T, Bell Canada, Cingular, Sprint, Qwest among its clientele, had a twelve month trailing revenue of $45 million and is the second largest vendor of services activation solution.

Subex and Syndesis service a total of 32 of the top 50 telecom operators, including six common clients.

Tracking the announcement, the SubexAzure stock hit an intra-day high of Rs 789.60 before closing at Rs 751.80, up 2.67 per cent over the previous close.

The Subex stock gained 17 per cent in the past one month and by over five per cent in the past week.

GDR issue

Subex plans to fund the proposed acquisition from the proceeds of its upcoming GDR/convertible bonds issue, through which it expects to raise up to $200 million, Mr Menon said.

As of September-end, Subex had cash reserves in excess of $8 million. The deal will provide exit option to venture capitalists Greylock, Sequoia, Vangrowth and Pequot from Syndesis.

To close by March

The transaction is expected to close by March 31, and revenues from Syndesis are likely to be consolidated from the April quarter.

SubexAzure will have an enhanced employee base of 1,200 with the addition of 300 people from Syndesis.

Post-merger, SubexAzure would reorganise its business into three strategic business units, Mr Menon said.

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