Mumbai: Shares of information technology (IT) services firm Mastek Ltd gained nearly 20% on Monday on news that its wholly-owned subsidiary in the US, Majesco Inc., has entered into a definitive merger agreement with Cover-All Technologies Inc. in a 100% stock-for-stock transaction.

The value of the deal was not disclosed.

Majesco is an IT products and services firm focused on the insurance sector. Cover-All Technologies is an insurance software company based in Morristown, New Jersey, US.

The combined entity will retain the Majesco brand globally.

Once the merger is closed, Cover-All’s stockholders and holders of its options and restricted stock units, will receive 16.5% of the outstanding shares of the common stock of the combined company, on a fully diluted basis.

The transaction is expected to close in the second quarter of 2015, after which Majesco will be listed on the New York Stock Exchange. Both companies will continue to operate as independent entities until then.

At 1.12pm, shares of Mastek were up 19.99% to 324.80 apiece, while the benchmark Sensex was down 0.17% to 27,302.82 points.

Majesco said that the combined entity is expected to have over $100 million in estimated annual revenue, with over 150 insurance customers worldwide. The joint offerings will cover life insurance, property and casualty and compensation business, consulting practice, business intelligence and data analytics and a cloud solution for core insurance systems.

The decision to merge the two businesses is part of Majesco’s strategy to consolidate its global insurance business under a single and separate entity. On 12 December, Majesco signed an agreement to acquire Agile Technologies Llc, an IT services company focused on the insurance sector. That deal is due to close in January.

The global insurance industry is in the midst of a once-in-a-generation technology transformation. The merger with Cover-All broadens Majesco’s capability and reach in servicing current and future customers, Majesco said in a press release on Monday.

“Both of the companies share the same vision—to serve and expand our customer base by leveraging our software, our collaborative cultures and our deep domain experience in insurance. By combining the value of Cover-All Technologies’ offerings and Majesco’s market-leading software, consulting, and IT services, we believe the new Majesco is best positioned to not only help insurers begin their transformation journey but to stay with them through every stage of their journey and become a trusted long term partner," said Ketan Mehta, chief executive officer and founder of Majesco, who will serve as president and chief executive officer of the combined entity.

“Majesco is expected to be a highly attractive provider for insurers of all tiers globally. We are particularly excited because, as a larger company, we will have better resources including expanded scale to meet the needs of any insurer regardless of size or location, and improved financial strength to invest in innovative and new products. We believe that this merger will significantly enhance shareholder value by allowing Cover-All shareholders the ability to participate in the growth of the combined company. We also believe that our customers and employees will greatly benefit from broad capabilities and increased opportunities in the combined company." said Manish Shah, president and CEO of Cover-All.

The transaction is subject to customary closing conditions, including the filing and effectiveness of a registration statement with the US’ Securities and Exchange Commission, Cover-All stockholder approval, and regulatory approvals.