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Virtusa completes the acquisition of 51.7% of the fully diluted outstanding shares of Polaris.
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Virtusa updates fourth quarter and full fiscal year 2016 guidance based on the transaction closing date.
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Jitin Goyal, CEO of Polaris, named President, Banking and Financial Services (“BFS”) of Virtusa and Polaris.
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Raj Rajgopal, President of Virtusa, named President, Enterprise Technology & Solutions (“ETS”) of Virtusa and Polaris.
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Virtusa to commence a mandatory open offer to purchase up to an additional 26% of the outstanding shares of Polaris beginning on March 11, 2016.
Virtusa Corporation today announced that its India subsidiary, Virtusa Consulting Services Private Limited (“Virtusa India”), has acquired all of the outstanding shares of Polaris Consulting & Services, Ltd. (“Polaris”) (BSE: POLARIS NSE: POLARIS MSEI: POLARIS) held by Mr. Arun Jain, founder and chairman of Polaris, Orbitech Private Limited, and certain other minority stockholders, representing an aggregate of approximately 51.7% (1) of the fully diluted outstanding shares of Polaris for an average of $3.12 per share (INR 213.883 per share) (2), for an aggregate purchase consideration of $165.89 million (INR 11,364 million) (2).
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. In their respective roles, Mr. Goyal and Mr. Rajgopal will be responsible for executing Virtusa’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.
Kris Canekeratne, Virtusa’s Chairman and CEO, stated, “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. Combined, Virtusa and Polaris create a robust platform and a unique and compelling value proposition. We are enthusiastic about providing end-to-end solutions and services in banking and financial services, greatly expanding our addressable market and positioning us well to pursue larger consulting and outsourcing opportunities.”
Mr. Canekeratne continued, “I would also like to congratulate Jitin and Raj on their respective appointments. Their unparalleled industry expertise, leadership skills, and proven track record of driving business growth will be invaluable as we embark on our next phase of expansion.”
Beginning on March 11, 2016, Virtusa will commence an unconditional mandatory open offer to Polaris’ public shareholders to purchase up to an additional 26% (3,4) 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)(2). 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% (4) majority interest in Polaris.
Highlights of the Virtusa and Polaris Combination
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The combination of Virtusa and Polaris creates a leading global provider of IT services and solutions to BFS, bringing together Virtusa’s deep domain expertise in consumer and retail banking with Polaris’ proven strength in corporate and investment banking.
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Virtusa expects to realize over $100 million of cumulative revenue synergies over the next three fiscal years.
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Polaris is expected to be approximately ($0.11) dilutive to Virtusa’s non-GAAP EPS in fiscal year 2016, slightly dilutive in fiscal year 2017, and accretive in fiscal year 2018 and beyond.
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Upon the closing, Citigroup Technology Group, Inc. (“Citi”) has designated Virtusa and Polaris as preferred vendors for Global Technology Resource Strategy (“GTRS”) for the provision of IT services to Citi on an enterprise-wide basis.
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Virtusa and Polaris combined have approximately 19,000 (5) employees as of December 31, 2015.