Ahmedabad-based IT services company Mastek Ltd's US-based subsidiary Majesco Inc has signed a definitive agreement to merge NYSE-listed Cover-All Technologies with itself in a 100 per cent stock-for-stock transaction, as per a stock market disclosure. Financial details of the transaction, however, were not disclosed.
Once the merger process is completed, Cover-All's stockholders and holders to its options and restricted stock units will receive 16.5 per cent of the outstanding shares of the common stock of the combined company on a fully diluted basis, the statement said. The combined entity will retain the Majesco brand globally.
The transaction is expected to close in the second quarter of 2015, after which Majesco is likely to be listed on the New York Stock Exchange. Both companies will continue to operate as independent entities until then.
The decision to merge the two businesses is part of Majesco’s efforts to consolidate its global insurance business under a single and separate entity, Mastek said in the statement. On 12 December, Majesco entered into an agreement to buy the business of Agile Technologies (Agile), an insurance industry focused IT consulting firm in the US.
“Both of the companies share the same vision—to serve and expand our customer base by leveraging our software, our collaborative cultures and our deep domain experience in insurance. By combining the value of Cover-All Technologies’ offerings and Majesco’s market-leading software, consulting and IT services, we believe the new Majesco is best positioned to not only help insurers begin their transformation journey but to stay with them through every stage of their journey and become a trusted long-term partner,” Ketan Mehta, chief executive officer and founder of Majesco, who will serve as president and chief executive officer of the combined entity, said.
In the statement, Majesco said that the combined entity is expected to have over $100 million in estimated annual revenue, with over 150 insurance customers worldwide.
The joint offerings will cover life insurance, property and casualty and compensation business, consulting practice, business intelligence and data analytics and a cloud solution for core insurance systems, it added.
“We believe that this merger will significantly enhance shareholder value by allowing Cover-All shareholders the ability to participate in the growth of the combined company. We also believe that our customers and employees will greatly benefit from broad capabilities and increased opportunities in the combined company.” said Manish Shah, president and CEO of Cover-All.
The transaction, however, is subject to customary closing conditions, including the filing and effectiveness of a registration statement with the US’ Securities and Exchange Commission, Cover-All stockholder approval and regulatory approvals.
Founded in 1982, Mastek is a software solutions and integration services company and offers a suite of information technology solutions and services. The company serves insurance, financial services and government sectors.
Shares of Mastek closed the day at Rs 324.80, up 20 per cent from their previous close on BSE in flat Mumbai market.
(Edited by Joby Puthuparampil Johnson)