TMT
By 16 August, 2008

Hyderabad-based software solutions provider SemanticSpace has acquired 100 per cent stake in US-based Prolifics for $40 million (Rs 173 crore) in an all cash deal. The deal involves an upfront payment of $26 million, which is funded partly by internal accrual (Rs 64 crore) and partly by debt (Rs 40 crore).

The rest of the amount will be paid in the form of earn-out over the next two years. Prolifics is a systems integrator specialising in IBM technologies. Private equity-backed SementicSpace had also acquired Arsin Corporation which had a deep practice in SAP business process. Together Prolifics, SemanticSpace Technologies, and Arsin Corporation will operate as SemanticSpace Group, creating a new overall organization of 1,500 employees with more than $100 million in revenues.

Prolifics has operations in US, Europe and parts of India, and registered revenues of $52 million last year. Prolifics is headquartered in New York and plans to expand from current 300 person to a 900 person organisation, through both organic growth and through acquisitions. The company will continue on its IBM focus and will also be involved in the group’s management of sales and marketing.

“Our companies have the same heritage and approach – with strong technology backgrounds, an investment in R&D, a focus on creating reusable assets, and customer-centric values. The convergence of our companies marks an acceleration in the globalization of the software industry, giving enterprises a new ‘blended-shore’ choice in technology partnership that can scale to meet any need,” said Satya Bolli, CEO of SemanticSpace Technologies in a press release.

UTI Ventures and New Vernon hold around 18 per cent stake in SemanticSpace. The rest of the stake is held by promoters. The firm along with Arsin registered revenues of $25 million last year.

Mid-tier IT companies like NIIT Technologies, Mastek and 3i Infotech have inked overseas deals in the recent past with buyouts in the range of $20-100 million. 3i Infotech acquired US-based payment pocessing firm Regulus Group for $80 million, while NIIT acquired German co SoftTec. Mastek had acquired US-based STG for $30 million.

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