RPG-group Company Zensar Technologies will acquire US-based Professional Access from 3i Infotech as it seeks to increase IT services revenue from the retail e-commerce space.
All-cash deal The all-cash transaction, which also includes sale of PA’s software development centres in India, will push up the retail sector contribution to 14 per cent of Zensar’s revenue from 10 per cent currently.
Subba Rao Amarthaluru, Group Chief Financial Officer of RPG Enterprises, said the acquisition is in line with Zensar’s strategy of growing existing lines of business through organic and inorganic means.
Though both 3i Infotech and Zensar did not disclose the financial details of the transaction, industry watchers estimate that Zensar would spend $50-70 million through a combination of internal resources and debt.
With revenue of over $38 million, PA is one of the largest partners for Oracle’s ATG web and Endeca search platforms. The company has a presence in the US, the UK, Latin America, West Asia, Africa and India. It counts Vodafone, Liverpool, Best Buy, Nintendo and John Lewis as customers. The deal will be accretive to Zensar’s earnings from the current year itself, Harsh Goenka, Chairman of Zensar, said at a news conference, here on Thursday.
Around 800 employees of the target companies will become part of the Zensar’s 22,000-strong workforce post completion of the deal, Goenka added. In a regulatory filing, the debt-ridden 3i Infotech said: “These sales are in line with the group strategy to sell its non-core assets / investments and use the additional cash generated from such sale to de-leverage its balance sheet and for business purpose.”
The PA Group was acquired by 3i Infotech in 2007. PA’s founders Babu Venkatesh and Ashu Chahal will continue to manage the company which will become a 100 per cent subsidiary of the acquirer.
Advisors ICICI Securities was the financial advisor for the transaction while Nishith Desai Associates and Stahl Cowen Crowley Addis were the legal advisors.
Shares of Zensar were down by 0.03 per cent to close at ₹430 on the Bombay Stock Exchange today.