Upon closing of this transaction, Citigroup Technology, Inc, has agreed to designate Virtusa and Polaris as a preferred vendor for Global Technology Resource Strategy for the provision of IT services to Citi on an enterprise-wide basis.
Polaris Consulting and Services Ltd has entered into a definitive Share Purchase Agreement (SPA) with Virtusa Corporation whereby a subsidiary of Virtusa will acquire approximately 53% of the paid up share capital of Polaris from certain promoter entities led by Arun Jain and certain other shareholders, including OrbiTech Private Ltd (formerly known as Orbitech Limited).
In accordance with the terms and conditions of the SPA, Virtusa will purchase the shares at a price of approximately INR 220.73 per share, aggregating to approximately INR 1,173 crores. In addition, Virtusa will make an unconditional mandatory offer to the public shareholders of Polaris to purchase up to an additional 26% of the outstanding shares of Polaris.
The transaction is expected to close during the fourth fiscal quarter ending March 31, 2016. The transaction is subject to certain conditions to close, including regulatory approvals.
The board of directors of Polaris approved the execution of the SPA as Virtusa would be a complementary partner offering a compelling alternative to drive the digital agenda of the global BFS industry. The deal will expand presence in key markets and enhance the ability to pursue larger consulting and outsourcing contracts.
Arun Jain, Chairman of Polaris Consulting & Services Ltd., said, “I am delighted to have identified Kris Canekeratne and his team at Virtusa to pass on the baton to grow Polaris by offering greater value to customers and more opportunities for the team. I wish all Polaris associates who contributed to building Polaris into a world class company in the BFSI space, continued success in their journey under the larger canvas of Virtusa and Polaris. This will also enable me to establish and pursue innovative models for social impact using Design Thinking in the areas of health and education, in addition to my focus on steering Intellect Design Arena Limited into a global digital products powerhouse”.
In addition, Polaris and Virtusa agreed to certain productivity savings and associated reduced spend commitments for a period of two years, which, if not achieved, would require Virtusa/Polaris to provide certain minimum discounts to Citi. The parties agreed to amend Polaris’ master services agreement with Citi such that Virtusa Corporation would also be deemed a contracting party and would assume, and agree to perform, or cause Polaris to perform, all applicable obligations under the master services agreement. The Preferred vendor status provides an opportunity to competitively bid for additional/new work.