Carlyle-backed Cyient to acquire US-based Certon Software

25 January, 2017

Software services firm Cyient Ltd said on Tuesday it has agreed to acquire the US-based Certon Software Inc in cash to strengthen its aerospace and defence vertical.

The deal involves a payment of $7.5 million on a cash- and debt-free basis subject to closing adjustments, the Mumbai-listed company said in a stock-exchange filing. It also involves a deferred payout based on Certon’s future performance, Cyient said, without elaborating.

The acquisition, being made through wholly owned US unit Cyient Inc, is the fifth by the Indian company in two-and-a-half years.

Cyient, which is backed by global private equity firm Carlyle, said that Certon Software brings complimentary skills to strengthen its avionics solutions business.

The transaction does not need regulatory approvals and is likely to be concluded within 30 days.

Certon was set up in 2006. It performs independent verification and validation services for companies seeking certification for safety-critical systems, embedded software and electronic hardware. 

The Florida-based company’s revenue increased to $7.3 million in 2015 from $6.2 million in the previous year. Its current revenue run rate is $6 million and it has around 45 employees.

Cyient’s takeover deals

The company has been pursuing an aggressive acquisition strategy. Late last year, it acquired UK-based Blom Aerofilms Ltd to expand its offerings.

In July 2015, Cyient acquired Singapore-based Global Services Engineering Asia from aerospace engine manufacturer Pratt & Whitney for an undisclosed amount. The same year, Cyient bought a 74% stake in Mysore-headquartered Rangsons Electronics Pvt. Ltd, an electronics systems design and manufacturing services company.

Cyient has attracted several private equity firms as investors. PE firm Carlyle had picked up a 10% stake in the firm for Rs 210 crore in 2012.

PE firm ChrysCapital, which had invested Rs 80 crore to Rs 90 crore in May 2013 in Cyient, partially exited in January 2015.

Previously, General Atlantic, which had invested Rs 260 crore in 2007, fully exited the firm in 2014.

Meanwhile, in 2015, Cyient sold its IT services unit Techwave Consulting Inc to focus on its core engineering services, data, network and operations businesses. 

Cyient reported revenue of Rs 1,245 crore for the financial year ended 31 March 2016. The company has clients in the aerospace, consumer goods, energy, medical, mining, semiconductor, rail transportation, telecom and utilities industries.

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Carlyle-backed Cyient to acquire US-based Certon Software

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