Tech Mahindra tweaks terms to acquire Cerium Systems, Zen3 Infosolutions
Photo Credit: Reuters

Tech Mahindra Ltd, the information technology arm of the multinational Mahindra Group, has changed some of the terms of its acquisition deals with two companies announced in January and February this year.

The Pune-based company in a stock-exchange filing said it will initially acquire a 51% stake in Cerium Systems Pvt. Ltd for Rs 245 crore (approximately $32.11 million at current exchange rates), with the remaining balance of 49% stake to be acquired over three years.

The valuation of the remaining stake shall be linked to the financial performance of Cerium Systems, it added.

In January, Tech Mahindra had said it would acquire 70% of Cerium Systems at an enterprise value of Rs 245 crore.

Bengaluru-based Cerium Systems, founded in 2013, is an integrated circuit and embedded software design service provider. The company has over 800 employees across offices in Bengaluru, California and Malaysia’s Penang.

In a separate filing, Tech Mahindra said it will initially pay $35 million (around Rs 266.98 crore) for Zen3 Infosolutions (America) Inc., with a deferred payment of $4 million to be paid over two years.

The IT company will also pay the balance of $25 million of the acquisition value over three years. This component will be linked to the financial performance of the company. In February, Tech Mahindra has announced that it would acquire Zen3 and its Indian unit for up to $64 million (Rs 460 crore) in cash.

Zen3, which was founded in 2013, has capabilities in Al enablement services, AI speech solutions, cloud engineering, software product engineering, and DevOps.

Shares of Tech Mahindra ended the day 3.30% down at Rs 527.15 apiece.    

Tech Mahindra’s acquisitions

The Indian software services company has been making acquisitions. In its 2018 annual report, the IT firm had said it was aggressively setting up and buying platforms.

In November last year, Tech Mahindra had agreed to acquire Born Group Pte. Ltd and its Indian unit as part of efforts to enhance its consulting capabilities.  

In July 2019, Tech Mahindra had agreed to acquire a majority stake in US design consultancy Mad*Pow Media Solutions LLC.

In June, the Indian software services company said it is acquiring Canada-headquartered IT consultancy Objectwise Consulting Group Inc.  

In April, the IT firm said it will acquire 18.1% stake each in Infotek Software & Systems Pvt. Ltd and Vitaran Electronics Pvt. Ltd for a total of up to Rs 13 crore.

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