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Thursday, 16 January 2014 00:00 - - {{hitsCtrl.values.hits}}
Virtusa Corporation, a global IT services company that combines innovation, technology leadership and industry solutions to transform the customer experience, announced that it has acquired all the outstanding shares of TradeTech Consulting Scandinavia AB and its subsidiaries (TradeTech), headquartered in Stockholm, Sweden. TradeTech is a leading consulting and IT services provider specializing in treasury and asset management for major financial institutions and multi-national corporations, primarily in the Nordic countries.
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. TradeTech clients will continue to benefit from local operational support and now will have access to Virtusa’s global delivery model and broader services capabilities.
Virtusa Chairman and CEO Kris Canekeratne stated: “We are pleased to welcome Joakim Wiener, the TradeTech team members, and their clients to Virtusa. The complementary expertise that TradeTech delivers will help increase our total addressable market and provide our combined client base with expanded service offerings. In addition, this acquisition is an important step in establishing Virtusa in the Nordic countries and providing a broad set of best-in-class consulting and outsourcing service to this region.”
TradeTech CEO Joakim Wiener stated: “We are pleased to join the Virtusa team and believe this is a tremendous opportunity to extend our services globally. We share a common culture based on a commitment to innovation and service excellence that will help our combined clients accelerate their business outcomes.”
TradeTech was advised by Incepto, a Nordic-based corporate finance advisory firm specialising in M&A transactions.
Financing summary
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% and LIBOR plus 1.75% based on Virtusa’s ratio of indebtedness to Adjusted EBITDA. The term of the credit facility is five years, ending 31 December, 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.
Financial overview of transaction
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.
For the fourth quarter of Virtusa’s fiscal year 2014 ending 31 March, 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.
About Virtusa Corporation
Virtusa provides end-to-end information technology (IT) services to Global 2000 companies. These services, which include IT consulting, application maintenance, development, systems integration and managed services, leverage a unique Platforming methodology that transforms clients’ businesses through IT rationalisation. Virtusa helps customers accelerate business outcomes by consolidating, rationalising, and modernising their core customer-facing processes into one or more core systems.
Virtusa delivers cost-effective solutions through a global delivery model, applying advanced methods such as Agile and Accelerated Solution Design to ensure that its solutions meet the clients’ requirements. As a result, its clients simultaneously reduce their IT operations cost while increasing their ability to meet changing business needs.
Founded in 1996 and headquartered in Massachusetts, Virtusa has operations in North America, Europe, and Asia.
