Cologne-headquartered SQS Software Quality Systems AG is acquiring a controlling stake in Chennai-based Thinksoft Global Services Ltd for Rs 146.6 crore ($23.4 million), as per a stock market disclosure.
Promoters of Thinksoft, including AV Asvini Kumar, Vanaja Arvind, Mohan Parvatikar, AK Latha, AK Krishna, Aarti Arvind and Rajan CV, who together hold 53.57 per cent stake in the company have struck a deal to initially sell 26 per cent stake to SQS for Rs 68.7 crore.
This automatically triggers a mandatory open offer for acquiring 3 million shares more which may cost around Rs 79 crore more. However, if the open offer is not fully successful, the promoters have agreed to sell that many more shares to allow SQS to hit a shareholding of 56 per cent by selling their remaining shares.
The deal has been struck at Rs 260 per share or over 60 per cent premium to the last traded price a day ahead of the deal announcement. Thinksoft scrip was up 20 per cent hitting the upper circuit of the day at Rs 194.15 on the BSE in a weak Mumbai market on Friday.
Founded in 1988, Thinksoft Global Services (formerly Reliant Global Services (India) Pvt Ltd) is a software testing company which offers functional and performance testing, test automation and requirements documentation services. The firm offers services to banking, financial services and insurance sectors.
The firm clocked a 33 per cent rise in revenues to Rs 161 crore for the year ended March 31, 2013. Its net profit shot up over 70 per cent to Rs 19.4 crore in the same period. The latest deal values the company at little over Rs 260 crore or around 14x its one-year-old earnings.
The deal values the firm almost five times its 52-week low hit in March this year.
SQS Software provides software testing and quality management services and employs around 2,800 people in Europe, Asia, North America and Africa. Along with a strong presence in Germany and the UK, SQS Software has further subsidiaries in Austria, Egypt, Finland, France, India, Ireland, the Netherlands, Norway, South Africa, Sweden, Switzerland, and the US. It also has a joint venture in Portugal and a partnership with a company in Spain.
In 2012, SQS generated a turnover of €210.1 million. The company is listed on the AIM platform of the London Stock Exchange, with a secondary listing on the Deutsche Börse ‘Open Market’.
If the deal materialise, this would be its second acquisition in India. In 2008, it acquired 75 per cent stake in Pune-based VeriSoft InfoSystems and VeriSoft InfoServices for $2.81 million in cash and stock.
(Edited by Joby Puthuparampil Johnson)