Information technology company Tech Mahindra Ltd said on Monday it has agreed to acquire US-based healthcare software provider CJS Solutions Group LLC for an enterprise value of $110 million (Rs 734 crore).
The Indian company said in a stock-exchange filing it will make upfront cash payment of $89.5 million to buy an 84.7% stake in CJS and will purchase the remaining over three years. The transaction is likely to close before the end of April.
Tech Mahindra will may a maximum of $130.5 million over calendar years 2017, 2018 and 2019 to acquire the remaining 15.3% based on milestones for revenue and operating profit.
The acquisition comes at a time when Indian IT firms are bracing for potential difficulties in the US, their largest market, because of the protectionist policies of the Donald Trump administration.
CJS Solutions operates as the HCI Group and posted revenue of $114 million for the 12 months through September 2016. The Florida, US-based company also has a presence in Europe, Middle East and Asia Pacific. It employs about 500 people globally.
The HCI group specialises in providing information technology services to healthcare providers and implements the Electronic Medical Records (EMR) software. Tech Mahindra said the acquisition will help it scale up its healthcare revenues as the HCI group has several active contracts in this segment.
“Healthcare is one of the few sectors that are driving adoption of digital technologies,” said CP Gurnani, Tech Mahindra CEO and managing director. “The acquisition will not only position Tech Mahindra as a significant player in the healthcare provider space but will also provide an opportunity to go deeper in this space via EMR implementation and surrounding services route.”
Digitalisation is one of the main pillars of Tech Mahindra’s growth strategy, president and CTO Atul Kanwar said.
Lodestone Capital Advisors advised Tech Mahindra on this transaction. EY did the financial due diligence while Greenberg Traurig LLP was the legal adviser.
This is Tech Mahindra’s first acquisition in eight months. It had acquired UK-based digital services provider Bio Agency for $66 million in June last year.
A month prior to that, the company acquired UK-based fintech firm Target Group in an all-cash deal valued up to £120 million including debt to boost its offerings in the banking and financial services segment. At the time, Gurnani had said that the Target Group’s strong intellectual property and disruptive proprietary platform would enhance the company’s fintech offering.
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