Tech Mahindra to buy CJS Solutions Group for $110 million
Tech Mahindra to pay upfront $89.5 million for the acquisition of 84.7% stake in CJS Solutions, the remainder will be acquired over three years
Mumbai: Software services firm Tech Mahindra Ltd on Monday said it has signed a definitive agreement to acquire CJS Solutions Group LLC, a US-based healthcare information technology consulting company that does business as The HCI Group, the company said in stock exchange filing.
The deal values CJS Solutions at an enterprise value of $110 million, Tech Mahindra said in the filing.
Tech Mahindra will make an upfront payment of $89.5 million for purchase of an 84.7% stake in the firm. The balance stake of 15.3% will be acquired over a period of three years, it said.
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Based in Jacksonville, Florida, The HCI Group works with global tier-I healthcare service providers, primarily in the US and UK. It focuses on providing end-to-end implementation of electronic health record (EHR) and electronic medical record (EMR) software, training and support services.
The company also has a presence in Europe, West Asia and Asia-Pacific, and employs more than 500 professionals globally, according to the note.
Healthcare and life sciences has been one of the focus areas for Tech Mahindra globally and the acquisition will help in consolidating its position, Tech Mahindra said.
“Healthcare is one of the few sectors globally that is driving adoption of digital technologies. 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,” said C.P. Gurnani, managing director and chief executive officer of Tech Mahindra.
In the 12-month period to September 2016, The HCI Group had revenues of $114 million.
The transaction is expected to close by April, subject to regulatory approvals.
Lodestone Corporate Advisors is the exclusive adviser to Tech Mahindra on the transaction.
“The acquisition aligns very well with our DAVID strategy where ‘Digitalization’ is one of the five main pillars of our growth strategy. It also aligns perfectly with our new brand philosophy—‘connected world. connected experiences’,” said Atul Kunwar, president and chief technology officer at Tech Mahindra.
DAVID is short for digital, automation, verticalization, innovation and disruption, and Tech Mahindra, which ended the year to March with a revenue of $4.04 billion, is hoping it will help it meet the goal it has set: more than doubling revenue to $10 billion by March 2020, Mint reported in December.
The strategy could see India’s fifth largest outsourcing firm reporting revenue from some of its newer bets, such as cybersecurity and blockchain, by 2018, Mint reported.
In May 2016, Tech Mahindra announced it will acquire UK-based Target Group in a deal worth around £120 million to strengthen its presence in the banking and financial services space.
In June, it said it had acquired UK-based digital transformation firm BIO Agency Ltd.
The acquisition announcement was made after market hours. On Monday, shares of Tech Mahindra declined 0.94% to Rs499.25 on BSE, while the benchmark Sensex rose 0.75% to 29,048.19 points.