Software services firm Zensar Technologies Ltd said it has agreed to acquire US-based insurance IT company Cynosure Inc., along with its offshore centre, for $33 million (Rs 214 crore) cash.
The acquisition will add insurance IT capabilities to Zensar Technologies Ltd, the company said. The insurance vertical accounts for 15% of the firm’s total business.
As part of the agreement, subsidiary Zensar Technologies Inc. will acquire 100% stake in Cynosure for Rs 201 crore ($31 million), plus pay earnouts over 24 months after the deal is closed. Earnout is an additional payment made to the seller of a company if that firm achieves the levels of profit or growth the seller said it was likely to achieve.
Under the pact, Zensar Technologies Inc. will also acquire Bengaluru-based offshore centre Cynosure Interface Solutions for Rs 13 crore ($2 million).
The total deal value is Rs 214 crore ($33 million).
The deal will be financed by internal accruals and debt, Zensar Technologies Ltd said.
The transaction is expected to close within three months.
After acquisition, Cynosure will continue to be managed by the founders led by Sid Wadhwa. The management and team of Cynosure will become a part of the acquirer’s insurance vertical.
Chicago-based Cynosure was founded in 2013 by former Guidewire Software Inc. employees Wadhwa, Anupam Mittra, Hari Kanangi and Anand Upnal. It provides Guidewire platform implementation services to property and casualty insurance companies operating primarily in the US market. The company’s revenue stood at $20 million in 2017.
It has a workforce of 154 employees across all its locations.
Acquirer Zensar Technologies Ltd’s consolidated revenue stood at Rs 800.2 crore and net profit Rs 60 crore for the October-December quarter.
In March 2017, Zensar Technologies Ltd had agreed to acquire Keystone Logic Solutions Pvt. Ltd, a Bengaluru-based digital supply chain company, for an undisclosed amount.