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Friday, 11 September 2020 00:35 - - {{hitsCtrl.values.hits}}
Baring Private Equity Asia (BPEA), one of the largest and most established private alternative investment firms in Asia, has announced it will buy Virtusa in all-cash transacted value at $ 2 billion.
NASDAQ-listed Virtusa Corporation, founded in Colombo in 1996 with a key operation, is a global
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| BPEA Managing Director Jimmy Mahtani |
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| Virtusa Co-Founder, Chairman and CEO Kris Canekeratne
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provider of digital strategy, digital engineering, and IT services and solutions that help clients change and disrupt markets through innovation engineering. The two firms yesterday announced the companies have entered into a definitive merger agreement under which funds affiliated with BPEA will acquire all outstanding shares of common stock of Virtusa for $ 51.35 per share in an all-cash transaction valued at approximately $ 2 billion.
BPEA is credited with assets under management of approximately $ 20 billion.
The price per share to be paid in the transaction, which was unanimously approved by the Virtusa Board of Directors, represents a premium of approximately 27% to the closing price of Virtusa common stock on 9 September, the last trading day prior to the transaction announcement, and premiums of approximately 29% and 46% to Virtusa’s volume-weighted average prices (VWAP) for the last 30 and 60 trading days respectively. In addition, the price paid implies a valuation of 16.2x firm value/last 12 months EBITDA as of 30 June.
Founded in 1997, BPEA works hand-in-hand with its portfolio companies, providing capital for expansion, recapitalisation or acquisitions, in order to grow their businesses for the long-term. BPEA brings directly relevant and value-enhancing experience in the IT services space through six prior investments dating back to 1998.
BPEA Managing Director Jimmy Mahtani said: “Technology is continuing to drive marketplace evolution at an unprecedented pace, creating new opportunities as well as complexities. Virtusa’s global team of talented professionals, software engineering heritage, and deep domain expertise position it uniquely to help enterprises across industries accelerate their most strategic digital and cloud transformation initiatives. We are excited to partner with the company in its next phase of evolution. We’re pleased that the Board has approved our offer unanimously.”
Virtusa Chairman and CEO Kris Canekeratne said: “This transaction represents a strategic evolution for Virtusa and a unique opportunity to take our business to new heights at a time of accelerating digital adoption.
“The benefits of this transaction extend to all Virtusa stakeholders, including our shareholders, who will receive immediate and substantial cash value, as well as to our team members, since BPEA has an exemplary track record of valuing innovative and talented global teams and supporting and empowering the businesses in which it invests. With a strong partner in BPEA, we will solidify our position at the forefront of digital transformation for years to come.”
Virtusa Board of Directors Lead Independent Director Rowland T. Moriarty said: “Through this transaction, we are pleased to maximise value and deliver a significant, immediate cash premium to Virtusa’s shareholders.
“The announcement is the culmination of a process by Virtusa and our financial advisors, which included engagement with strategic and financial parties regarding a potential transaction, and after a thorough review, the Board unanimously concluded that this all-cash premium transaction with BPEA achieved the Board’s objective.”
On 20 July, the Virtusa Board of Directors received an unsolicited proposal from an interested party to acquire Virtusa. Following receipt of the offer, consistent with the Board’s fiduciary duties to maximise shareholder value, the Board authorised the company and its financial advisors to engage with other potential strategic buyers and financial sponsors regarding a potential acquisition of Virtusa.
As part of this process, the company signed non-disclosure agreements with five parties and engaged with two others. After an independent review of the alternatives available, including the value creation opportunity through continued execution of the company’s strategic plan, the Virtusa Board unanimously determined that the all-cash premium transaction with BPEA for $ 51.35 per share in cash maximises value for Virtusa’s shareholders.
The transaction which is expected to close in the first half of 2021 is subject to the approval of Virtusa’s shareholders, customary regulatory requirements, including approval from The Committee on Foreign Investment in the United States (CFIUS), and customary closing conditions. The transaction is not subject to a financing condition.
The Orogen Group (Orogen), which holds 108,000 shares of Virtusa Convertible Preferred Stock and whose CEO is Vikram Pandit, an independent member of the Board, has entered into a voting agreement under which it has agreed to vote all of Orogen’s Convertible Preferred Stock in favour of the transaction.
Orogen’s shares of preferred stock are convertible into 3 million shares of Virtusa common stock and represent approximately 10% of the voting power in the company. The directors and executive officers of Virtusa have also entered into this voting agreement, and hold an additional approximate 5.7% of the voting power of the company.
J.P. Morgan Securities and Citi acted as financial advisors and Goodwin Procter LLP acted as legal counsel to Virtusa. BofA Securities is serving as financial advisor to BPEA and Ropes & Gray LLP is acting as legal counsel to BPEA.
Virtusa Corporation is a leading provider of digital business strategy, digital engineering, and information technology (IT) services and solutions that enable the digital transformation of Global 2000 enterprises by imagining, building and implementing the end-to-end technology solutions that are essential to compete in a digital-first world.
Virtusa partners with the leading companies in the Banking, Financial Services, Insurance, Healthcare, Communications, Media, Entertainment, Travel, Manufacturing, and Technology industries.
Virtusa helps its clients accelerate their digital and overall business transformation by providing multi-disciplinary agile teams of consultants, designers, engineers and sophisticated gamified tools. The company integrates its deep domain and digital engineering expertise with proven assets and processes embedded in its unique Digital Transformation Studio model, resulting in a high performance end-to-end delivery.
Its core services include consulting and system design, application engineering, analytics and data, digital process automation, enterprise application integration, cloud services and managed services.
Baring Private Equity Asia (BPEA) is one of the largest and most established private alternative investment firms in Asia, with assets under management of approximately $ 20 billion. The firm runs a private equity investment program, sponsoring buyouts and providing growth capital to companies for expansion or acquisitions with a particular focus on the Asia Pacific region, as well as investing in companies globally that can benefit from further expansion into the Asia Pacific region.
BPEA also manages dedicated funds focused on private real estate and private credit. The firm has a 23-year history and over 190 employees located across offices in Hong Kong, China, India, Japan, Singapore, Australia, and the US. BPEA currently has over 40 portfolio companies active across Asia with a total of 224,000 employees and sales of approximately $ 39 billion.
