Evan Vitale Consulting: US-based Virtusa to buy 53% stake in Polaris Consulting for Rs 1173 crore

NEW DELHI: US-based Virtusa today agreed to buy majority 53 per cent stake in Chennai-based Polaris Consulting and Services for about Rs 1,173 crore.

The combination will equip Virtusa to provide end-to-end global banking and financial services and solutions and pursue larger consulting and outsourcing opportunities.

According to the agreement, a subsidiary of Virtusa will acquire about 53 per cent of the paid up share capital from certain promoter entities, led by Arun Jain, and certain other shareholders, including OrbiTech (formerly known as Orbitech Limited), Virtusa said in a statement.

Virtusa will purchase shares at a price of about Rs 220.73 apiece, aggregating to about Rs 1,173 crore, it added.

“In addition, Virtusa will make an unconditional mandatory offer to the public shareholders of Polaris to purchase up to an additional 26 per cent of the outstanding shares of Polaris,” it said.

The deal will expand presence in key markets and enhance the ability to pursue larger consulting and outsourcing contracts, the statement said.

Polaris Consulting and Services had posted a net profit of Rs 47.34 crore, while its income from software development, support and BPO services stood at Rs 517.67 crore in the July-September 2015 quarter.

The deal was announced after trading hours. Polaris shares closed at Rs 204.50 apiece, down 1.02 per cent from previous close, on the BSE.

“I am delighted to have identified Kris Canekeratne and his team at Virtusa to pass on the baton to grow Polaris by offering greater value to customers and more opportunities for the team,” Polaris Consulting and Services Chairman Arun Jain said.

Last year, IT services firm Polaris Financial Technology (Polaris FT) had carved out its products business into Intellect Design Arena. Polaris FT later rebranded itself as Polaris Consulting and Services.

It had 7,648 employees (excluding BPO division) at the end of September 30, 2015.

“This will also enable me to establish and pursue innovative models for social impact using Design Thinking in the areas of health and education, in addition to my focus on steering Intellect Design Arena Limited into a global digital products powerhouse,” he said.

Virtusa Chairman and CEO Kris Canekeratne said Polaris brings a terrific team and an attractive, blue-chip client base to the organisation.

Upon closing of the transaction in the quarter ended March 2016, Citigroup Technology Inc will designate Virtusa and Polaris as a preferred vendor for providing IT services on an enterprise-wide basis.

In addition, the companies have agreed to certain productivity savings and associated reduced spend commitments for a period of two years, which, if not achieved, would require Virtusa/Polaris to provide certain minimum discounts to Citi.

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