Virtusa India acquires majority shares of Polaris

Virtusa

Virtusa India has completed the acquisition of 51.7 percent of the fully diluted outstanding shares of Chennai-based Polaris Consulting & Services.

Polaris shares were sold for an average of $3.12 per share (INR 213.883 per share), for an aggregate purchase consideration of $165.89 million (INR 11,364 million).

Jitin Goyal will remain CEO of Polaris, and was appointed President, BFS, to lead Virtusa’s and Polaris’ business operations serving the banking and financial services verticals.

Raj Rajgopal, President of Virtusa, was appointed President, ETS, and will lead Virtusa’s and Polaris’ operations serving the insurance, communications & technology, and media, information & other verticals.

Virtusa said Goyal and Rajgopal will be responsible for executing it’s and Polaris’ growth strategies, which will include driving over $100 million of cumulative revenue synergies over the next three fiscal years from the business combination.

“We are extremely pleased to close phase one of the Polaris transaction and we look forward to completing the mandatory open offer to Polaris’ public shareholders,” commented Kris Canekeratne, Virtusa’s Chairman and CEO.

Beginning on March 11, 2016, Virtusa will commence an unconditional mandatory open offer to Polaris’ public shareholders to purchase up to an additional 26 percent of the outstanding shares of Polaris.

The aggregate price for the shares to be purchased in such offer, assuming full tender and the offer price remaining unchanged, is estimated at approximately $86.1 million (INR 5,898 million).

Upon closing of the mandatory offer period on March 28, 2016, and assuming full tender, and settlement of the tendered shares by April 12, 2016, Virtusa will own a 74.99 percent majority interest in Polaris.

In connection with the acquisition, Virtusa management updated its current financial guidance. According to it, fourth quarter fiscal 2016 revenue is expected to be in the range of $169.0 to $172.0 million. GAAP diluted EPS is expected to be in the range of ($0.02) to $0.00.

Virtusa management currently expects Polaris to contribute revenue of approximately $17 million and to be approximately ($0.37) dilutive to Virtusa’s GAAP earnings per share, including approximately ($0.20) of dilution from transaction and integration expenses.

Fourth quarter fiscal 2016 non-GAAP diluted EPS is expected to be in the range of $0.43 to $0.45, including ($0.11) dilution from the Polaris transaction.

Similarly, fiscal year 2016 revenue is expected to be in the range of $597.4 to $600.4 million. GAAP diluted EPS is expected to be in the range of $1.06 to $1.08.

Virtusa management currently expects Polaris to contribute revenue of approximately $17 million and to be approximately ($0.40) dilutive to Virtusa’s GAAP earnings per share, including approximately ($0.23) of dilution from transaction and integration expenses.

Non-GAAP diluted EPS is expected to be in the range of $1.95 to $1.97, including ($0.11) dilution from the Polaris transaction.

Virtusa’s current GAAP diluted EPS guidance for the fourth fiscal quarter and the full fiscal year ending March 31, 2016 estimates Polaris transaction and integration expenses of $8.8 million and $10.0 million, respectively.

Arya MM

[email protected]

Related News

Latest News

Latest News