Coforge Ltd., previously known as NIIT Technologies, has agreed to acquire a controlling interest in SLK Global Solutions Ltd., in an effort to strengthen its financial services vertical.
As part of the agreement, Coforge will acquire an 80% stake in the provider of business process transformation services over two years, the software services firm said in an exchange filing. Of the 80% stake, 35% was bought on April 12 and 25% will be picked up within 23 business days from April 12. The remaining 20% will be acquired after two years.
The acquisition of the first 60% stake is for a cash consideration of Rs 918.3 crore, the filing said.
SLK Global, with more than 7,000 employees, has presence across India, North America and Philippines. Ohio-based Fifth Third Bank is its largest customer, besides a significant minority shareholder. The transaction also provides for a minimum revenue commitment from Fifth Third Bank for a period of five years, the filing said.
The deal is being funded through a combination of internal accruals and external borrowings.
“The acquisition will enable Coforge acquire a new top-five client, substantially scale up its current business process management operations business, strengthen its presence in the financial services vertical and expand its footprint in the U.S.,” the company said. This will also enable Coforge to compete for large deals with a material BPO/BPM operations component.
Sudhir Singh, chief executive officer at Coforge, expects very strong business synergies to be generated through this transaction. “This differentiated, high growth, margin accretive business further strengthens our position in the North America financial services industry and our BPM business,” he was quoted as saying in the filing.
Shares of Coforge pared losses of as much as 4% to close 1.5% lower at Rs 3,118 apiece. Of the 24 analysts tracking the company, 15 have a ‘buy’ rating, five suggest a ‘hold’ and four recommend a ‘sell’, according to Bloomberg data. The stock is trading 10.2% higher than its 12-month consensus price target of Rs 2,801.1 apiece.
