Virtusa expands European presence with TradeTech acquisition
View(s):US-based IT company Virtusa, which has a development centre in Sri Lanka, recently announced that it has paid US$20 million in cash for outstanding shares of Swedish financial outsourcing consultancy TradeTech, and its subsidiaries, to immediately extend Virtusa’s presence within Europe.
According to Virtusa’s announcement; “Under the terms of the share purchase agreement, Virtusa acquired all the outstanding shares of TradeTech for approximately $20 million in cash, as well as up to approximately $4 million in earn-out consideration upon TradeTech’s achievement of certain revenue and profit milestones for calendar year 2014. Virtusa has agreed to issue an aggregate of up to $2 million in deferred restricted stock awards from Virtusa’s stock option and incentive plan, not to exceed 65,000 shares, to certain of these new Virtusa employees. The shares will vest annually over a five year period”.
Further, the announcement also noted; “Virtusa is funding this transaction through a new $25 million secured revolving credit facility with JP Morgan Chase Bank, N.A. Interest under this credit facility accrues at a rate between LIBOR plus 1.5 per cent and LIBOR plus 1.75 per cent based on Virtusa’s ratio of indebtedness to Adjusted EBITDA. The term of the credit facility is five years, ending December 31, 2018. The credit facility has certain financial covenants pertaining to Funded Debt to Adjusted EBITDA and Minimum Fixed Charge Coverage Ratios. This facility replaces Virtusa’s existing $3 million line of credit”.
Additionally, it was also revealed; “For the fourth quarter of Virtusa’s fiscal year 2014 ending March 31, 2014, Virtusa management currently expects TradeTech to contribute revenue of approximately $4.2 million and to be neutral to Virtusa’s earnings per share on a US GAAP basis inclusive of approximately $800,000 in acquisition related amortisation. On an EBITDA basis, Virtusa currently expects the transaction to be slightly accretive for the fourth quarter of fiscal year 2014. Virtusa management currently expects the TradeTech acquisition to be slightly accretive to US GAAP earnings per share for fiscal year 2015″.
Meanwhile, also indicated within the announcement; “The acquisition expands Virtusa’s leading position within the banking, financial services and insurance industries by increasing its asset management and treasury services domain and technology expertise. With 60 team members, TradeTech’s core strengths include technology consulting, regulatory and compliance, implementation of global asset management and treasury platforms, as well as managed services. With the addition of TradeTech, Virtusa plans to leverage these complementary capabilities across its global client base, enabling Virtusa to offer a broader set of services to existing and new clients… TradeTech expects to immediately extend Virtusa’s presence within Europe, expanding Virtusa’s global footprint into the Nordics, a large and growing IT services market primed for increasing its use of outsourcing”.
(JH)