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Ybrant Digital Ltd, a privately held digital marketing solutions company, and LGS Global Ltd, which is listed on the Bombay Stock Exchange, will be merged to make a Rs 1,500-crore entity with 1,400 employees. The combined entity would be called Ybrant Digital Ltd.
Swap ratio
LGS Global is an IT outsourcing projects firm with a turnover of Rs 462 crore in 2010-11. Its board, which met on Monday, approved the merger plan and swap ratio. The exchange ratio is put at six equity shares (Rs 10 each) of LGS for every one equity share of Ybrant of Rs 10.
Post merger, promoters and investors of Ybrant would have 89 per cent in the combined entity, while promoters and investors of LGS Global would hold the remaining stake.
Ybrant would use this acquisition to enter the Indian stock markets. “The merger process is expected to take 3-4 months. We need to take permissions from the respective annual general body meetings and Andhra Pradesh High Court,” Mr Suresh Reddy, Chairman and Chief Executive Officer of Ybrant, told Business Line .
Mr Suresh Reddy would become the Chairman and CEO of the new entity, while Mr Subba Rao Karusula, Managing Director of LGS, would be the Business Head of the LGS Division of Ybrant.
“The combined entity would have $350 million in topline and $40-45 million in bottomline in 2011-12,” Mr Suresh Reddy said.
“We have huge strengths in front-end work of digital marketing business. LGS Global would give us 900 employees whom we can use for our backend operations. The combined entity would have a core focus of digital marketing,” he said, commenting on the merger.
Ybrant Digital, which raised $100 million in equity and debt from private equity firms such as Oak Investment Partners and GE Asia-Pacific, acquired seven companies so far.
LGS Global plan
Mr Karusala said LGS Global's expansion plan would continue. “Ybrant has presence in 20 countries. This would help us grow in these geographies. Also, we are going to recruit people with strengths in cloud computing and digital marketing,” he said.
Shares of LGS Global moved up marginally to Rs 51 on Monday, up by about one per cent over previous close.
kurmanath@thehindu.co.in
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