Orbitech merges with Polaris

Orbitech Solutions, a technology subsidiary of Citigroup, has merged with Chennai-based Polaris Software Lab to form a Rs 600 crore company in the Banking, Financial Services and Insurance (BFSI) segment. Arun Jain will continue to be the Chairman & Managing Director and CEO of the merged entity.

The new merged entity, which will continue to be called Polaris Software Lab Limited, will have 3,800 employees. Market analysts say the merger will make Polaris the 5th largest publicly listed software company in India. Under the terms of MoU, approved by the Board of Directors of both the companies, the shareholders of OrbiTech will receive approximately 14 newly issued Polaris shares for every 25 shares held in OrbiTech by them, giving the merged entity a current value of approximately Rs 2,700 crore. Polaris shareholders will own approximately 46 percent and OrbiTech shareholders will own 54 percent of the merged company. The enterprise value of Polaris was rated at $ 210 million by the joint valuation of Ernst & Young and Orbitech was rated at $ 246.75 million. This is 17.5 percent higher than the enterprise value of Polaris Software.

Kotak Mahindra Capital Company was the financial advisor and Enam Financial Consultants were strategic advisors to Polaris Software. Salomon Smith Barney was the sole advisor to OrbiTech Solutions. 

The Board will comprise of 12 members of which three will be from OrbiTech, seven from Polaris and two will be nominated by Arun Jain who has already proposed the names of RC Bhargava, former Managing Director of Maruti and Ashok

Jhunjunwala. 

About the merger, Ram Bhagwat, Managing Director, OrbiTech Solutions, who will be the CEO of OrbiPolaris Solutions (a division of the merged entity) and President of Polaris Software Lab said, "The new company is now powerfully positioned to accelerate growth and capitalize on new opportunities by acquiring new customers and enhancing existing relationships. The merger will provide OrbiTech with the enhanced platform to deliver its high quality OrbiPack products into the market place."

The revenue of Polaris Software for FY '02 stood at $60 million and that of OrbiTech Solutions, a private limited company generated a revenue of (unaudited) $ 66 million with a net income of $ 22 million. The net income of Polaris was $ 12 million.

Cyber News Service