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Virtusa Corporation of the US will acquire 53 per cent of Polaris Consulting and Services from promoter entities led by Arun Jain and other shareholders, including Orbitech Pvt Ltd. It will purchase the shares at ₹220.73 per share, aggregating to around ₹1,173 crore.
In addition, Virtusa, an IT consulting, systems implementation and application outsourcing service provider, will make an unconditional mandatory offer to the public shareholders of Polaris to purchase up to an addition 26 per cent of the outstanding share of Polaris, which provides software services to clients in banking and financial services.
Share purchase pact Both the companies today signed a definitive Share Purchase Agreement wherein a subsidiary of Virtusa Corporation will acquire the shares of Polaris’ shareholders, says a press release from Polaris.
Polaris’ board approved the agreement as ‘Virtusa will be a complementary partner offering a compelling alternative to drive the digital agenda of the global banking and financial services industry.’
Virtusa and Polaris collectively will have 18,000 employees, generate $836 million of 'pro forma' revenue for the 12-months ended September 30, said a Virtusa release.
Virtusa will finance the transaction through a combination of cash and debt. It has secured commitments for secured debt financing of $300 million from JP Morgan Chase Bank and Bank of America.
Upon closing this transaction, Citigroup Technology has agreed to designate Virtusa and Polaris as a preferred vendor for Global Technology Resource Strategy to provide IT services to Citi on an enterprise-wide basis. In addition, Polaris and Virtusa agreed to certain productivity savings and associated reduced spend commitments for two years, which if not achieved, would require Virtusa/Polaris to provide certain minimum discount to Citi.
Arun Jain, Chairman, Polaris Consulting, said that the deal will enable him to establish and pursue innovative models for social impact using ‘Design Thinking’ in the areas of health and education and focus on steering Intellect Design Arena Ltd, the product company of Polaris group, into a ‘global digital product powerhouse.’
Polaris BPO is not part of the deal. It will be sold to a third party as was announced last week. The BPO division employs nearly 1,200 people. Company officials had said last week that it was not strategic to the business and the company will concentrate on BFSI segment.
According to Kris Canekeratne, Chairman and CEO, Virtusa, the combination of both companies will provide end-to-end global BFS services and solutions, expand the addressable market and pursue larger consulting and outsourcing opportunities.
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