Virtusa to provide IT services to Citigroup after acquiring Polaris for USD270mn

Nov 07, 2015 (LBO) – Global IT outsourcing company, Virtusa Corporation announced that it is to acquire a majority interest in Polaris Consulting, a global IT solutions provider in financial services for 270 million US dollars.

The transaction includes both the 51.7 percent majority interest and an unconditional mandatory open offer to purchase up to 26 percent of the outstanding shares of Polaris.

Following the transaction, Citigroup Technology Group is to designate Virtusa and Polaris as a preferred vendor for Global Technology Resource Strategy for the provision of IT services to Citi on an enterprise-wide basis.

“Virtusa and Polaris would together create a leading global provider of end-to-end IT services and solutions to banking and financial services (BFS) industry segment,” a statement said.

As of September 2015, Chennai-based Polaris had approximately 7,650 employees, serving its global client base through 12 development centers.

For the six months ended September 2015, Polaris has generated total pro forma revenue of 150 million US dollars and had cash, cash equivalents, short and long-term investments of 44.8 million US dollars.

“Virtusa expects to realize over 100 million US dollars of cumulative revenue synergies over the next three years from this business combination,” Virtusa Chairman and CEO Kris Canekeratne told reporters in Colombo.

“Virtusa has secured commitments for senior secured debt financing of 300 million US dollars from J.P. Morgan Chase and Bank of America comprised of a 100 million US dollars revolving credit facility and a 200 million US dollars multi-draw term loan.” he said.

The Polaris transaction is expected to close during Virtusa’s fourth fiscal quarter ending March 31, 2016.

Virtusa which has offices around the globe including in Sri Lanka expects its 2016 revenue to be in the range of 654.6 to 661.6 million US dollars.

Virtusa and Polaris collectively will have approximately 18,000 employees, generating 826 million dollars of pro forma revenue for the twelve months ended September 30, 2015.

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