- Virtusa and Polaris would together create a leading global provider of end-to-end IT services and solutions to banking and financial services (“BFS”) industry segment.
- Virtusa and Polaris collectively will have approximately 18,000 (1) employees, generating $826 million of pro forma revenue(2) for the twelve months ended September 30, 2015.
- On a non-GAAP basis, transaction is estimated to be ($0.08) dilutive to fiscal fourth quarter 2016 EPS, slightly dilutive to fiscal year 2017 EPS, and accretive thereafter.
Westborough, MA – (November 5, 2015) Virtusa Corporation (NASDAQ GS: VRTU), a global business consulting and IT outsourcing company that combines innovation, technology leadership and industry solutions to transform the customer experience, today announced that it has entered into a definitive agreement to acquire a majority interest in Polaris Consulting & Services, Ltd. (“Polaris”) (BSE: POLARIS NSE: POLARIS MSEI: POLARIS), a global provider of IT solutions primarily to the banking and financial services industry segment, for approximately $270 million. The transaction consideration includes both the 51.7% majority interest and an unconditional mandatory open offer to purchase up to 26%(3) of the outstanding shares of Polaris from the public shareholders of Polaris (as further described below in “Terms and Financing of the Polaris Transaction”). In addition, upon closing of the Polaris transaction, Citigroup Technology Group, Inc. (“Citi”) has agreed to designate Virtusa and Polaris as a preferred vendor for Global Technology Resource Strategy (“GTRS”) for the provision of IT services to Citi on an enterprise-wide basis.
As of September 30, 2015, Chennai, India-based Polaris had approximately 7,650(1) employees, serving its global client base through 12 development centers. For the six months ended September 30, 2015, Polaris generated total pro forma revenue(2) of approximately $150 million. Polaris had cash, cash equivalents, and short-term and long-term investments of approximately $44.8 million(4) as of September 30, 2015.
Upon the closing of the Polaris transaction, the combination of Virtusa and Polaris would create a leading global provider of IT services and solutions to the banking and financial services industry segment. The acquisition would combine Virtusa’s deep domain expertise in consumer and retail banking with Polaris’ proven strength in corporate and investment banking. This combination would provide an end-to-end portfolio of differentiated solutions to the global banking and financial services industry segment, improving the combined entity’s competitive position, and expanding its addressable market. Virtusa expects to realize over $100 million of cumulative revenue synergies over the next three fiscal years from the business combination.
The Polaris transaction is expected to close during Virtusa’s fourth fiscal quarter ending March 31, 2016. The closing of the definitive agreement and the unconditional mandatory open offer to purchase shares from the public shareholders of Polaris are each subject to customary conditions, including receipt of required regulatory approvals.
Commenting on the transaction, Kris Canekeratne, Virtusa’s Chairman and CEO, stated, “Polaris brings a terrific team and an attractive, blue-chip client base to our organization. The combination of Virtusa and Polaris will enable us to provide end-to-end global BFS services and solutions, expand our addressable market, and position us to pursue larger consulting and outsourcing opportunities. We are enthusiastic about working with the Polaris team to build out our platform and offer clients a distinctive set of offerings.”
Jitin Goyal, Chief Executive Officer & Executive Director of Polaris, said, “Virtusa and Polaris share a common goal of delivering best-in-class solutions and the highest level of service excellence to our clients. I believe the combination of the two companies will enable us to better address our clients’ most critical business objectives.”
Terms and Financing of the Polaris Transaction
Virtusa, through its India subsidiary, Virtusa Consulting Services Private Limited (“Virtusa India”), has entered into a definitive agreement to acquire all of the outstanding shares of Polaris held by Mr. Arun Jain, founder and chairman of Polaris, Orbitech Private Limited, and certain other minority stockholders, representing an aggregate of approximately 51.7%(5&6) of the fully diluted outstanding shares of Polaris for $3.38 per share (INR 220.73 per share) (7), for an aggregate purchase consideration under the definitive agreement of approximately $180 million (INR 11,728.08 million) (7).
In addition, in accordance with the requirements of the Indian securities regulator, the Securities and Exchange Board of India (“SEBI”) and the applicable Indian rules on Takeovers, Virtusa India shall make an unconditional mandatory open offer to Polaris’ public shareholders to purchase up to an additional 26%(3) of the outstanding shares of Polaris. The aggregate price for the shares to be purchased in the unconditional, mandatory open offer, assuming full tender and the offer price remaining unchanged, is estimated at approximately $90 million (INR 5,877 million) (7).
Virtusa intends to finance the transaction through a combination of cash on its balance sheet and debt. Virtusa has secured commitments for senior secured debt financing of $300 million from J.P. Morgan Chase Bank, N.A. and Bank of America, N.A., in support of the transaction, comprised of a $100 million revolving credit facility and a $200 million multi-draw term loan. Interest under this facility accrues at a rate per annum of LIBOR plus 2.75%, subject to step-downs based on Virtusa’s ratio of debt to earnings before interest, taxes, depreciation, and amortization, adjusted for stock compensation expense (“adjusted EBITDA”). Virtusa intends to enter into an interest rate swap agreement to minimize interest rate exposure. The term of the facility is five years from date of close. The definitive credit agreement governing the facility will include a maximum debt to adjusted EBITDA ratio and a minimum fixed charge ratio. This facility will replace Virtusa’s existing $25 million credit facility with J.P. Morgan Chase Bank, N.A.
Financial Overview of the Polaris Transaction
In the fiscal third quarter ending December 31, 2015, Virtusa expects to incur approximately $0.6 million of transaction expenses related to the Polaris transaction.
For the fiscal fourth quarter ending March 31, 2016, assuming an early January 2016 close, Virtusa management currently expects Polaris to contribute revenue of approximately $70 million and to be approximately ($0.55) dilutive to Virtusa’s GAAP earnings per share, including approximately ($0.23) of dilution from acquisition-related charges. On a non-GAAP basis, Virtusa management expects the Polaris transaction to be approximately ($0.08) dilutive to earnings per share. Both the GAAP and non-GAAP EPS estimates include approximately ($0.07) of dilution from interest on debt to finance the transaction.
Virtusa management currently expects the Polaris combination to be slightly dilutive to non-GAAP earnings per share for fiscal year 2017, inclusive of expected revenue synergies including preferred vendor status at Citi offset by contractual productivity savings commitments for a period of two years at Citi, if not achieved, would require Virtusa to provide certain minimum discounts, and higher interest expense from deal-related financing. Virtusa management currently expects Polaris to be accretive to non-GAAP EPS in fiscal year 2018 and beyond, taking into account expected acceleration of revenue synergies, balance sheet deleveraging, tax benefits related to interest expense, and anticipated additional equity investments.
J.P. Morgan acted as financial advisor to Virtusa. Goodwin Procter, LLP and ALMT Legal Bangalore acted as legal advisors to Virtusa. Credit Suisse acted as primary financial advisor and Spark Capital as co-advisor to Polaris. J Sagar Associates acted as legal advisor for Polaris and AZB & Partners acted as legal advisor for Orbitech.
Virtusa management has updated its current financial guidance:
- Third quarter fiscal 2016 revenue is expected to be in the range of $150 to $153 million. GAAP diluted EPS is expected to be in the range of $0.39 to $0.41 and non-GAAP diluted EPS is expected to be in the range of $0.54 to $0.56.
- Fiscal year 2016 revenue is expected to be in the range of $654.6 to $661.6 million. GAAP diluted EPS is expected to be in the range of $1.02 to $1.08 and non-GAAP diluted EPS is expected to be in the range of $2.07 to $2.13.
Virtusa’s current GAAP diluted EPS guidance for the third fiscal quarter and the full fiscal year ending March 31, 2016 reflects the inclusion of Polaris transaction and integration expenses of $0.6 million and $10.0 million, respectively.
The Company’s third quarter and fiscal year 2016 diluted EPS both estimate an average share count of approximately 30.1 million, (assuming no further exercises of stock-based awards) and assume a stock price of $56.99, which was derived from the average closing price of the Company’s stock over the five trading days ended on October 30, 2015. Deviations from this stock price may cause actual EPS to vary based on share dilution from Virtusa’s stock options and stock appreciation rights.
Conference Call and Webcast
Virtusa will host a conference call today, November 5, 2015 at 8:00 AM Eastern time to discuss the Polaris transaction, current financial guidance, and other corporate developments. To access this call, please dial 800-895-1085 (domestic) or 785-424-1055 (international). A replay of this conference call will be available through November 12, 2015 at 877-870-5176 (domestic) or 858-384-5517 (international). The replay passcode is 117179. A live webcast of this conference call will be available on the “Investors” page of the Company’s website (www.virtusa.com), and a replay will be archived on the website as well.
U.S. inauguration turns poet Amanda Gorman into best seller
WASHINGTON (Thomson Reuters Foundation) – The president’s poet woke up a superstar on Thursday, after a powerful reading at the U.S. inauguration catapulted 22-year-old Amanda Gorman to the top of Amazon’s best-seller list.
Hours after Gorman’s electric performance at the swearing-in of President Joe Biden and Vice President Kamala Harris, her two books – neither out yet – topped Amazon.com’s sales list.
“I AM ON THE FLOOR MY BOOKS ARE #1 & #2 ON AMAZON AFTER 1 DAY!” Gorman, a Los Angeles resident, wrote on Twitter.
Gorman’s debut poetry collection ‘The Hill We Climb’ won top spot in the online retail giant’s sale charts, closely followed by her upcoming ‘Change Sings: A Children’s Anthem’.
While poetry’s popularity is on the up, it remains a niche market and the overnight adulation clearly caught Gorman short.
“Thank you so much to everyone for supporting me and my words. As Yeats put it: ‘For words alone are certain good: Sing, then’.”
Gorman, the youngest poet in U.S. history to mark the transition of presidential power, offered a hopeful vision for a deeply divided country in Wednesday’s rendition.
“Being American is more than a pride we inherit. It’s the past we step into and how we repair it,” Gorman said on the steps of the U.S. Capitol two weeks after a mob laid siege and following a year of global protests for racial justice.
“We will not march back to what was. We move to what shall be, a country that is bruised, but whole. Benevolent, but bold. Fierce and free.”
The performance stirred instant acclaim, with praise from across the country and political spectrum, from the Republican-backing Lincoln Project to former President Barack Obama.
“Wasn’t @TheAmandaGorman’s poem just stunning? She’s promised to run for president in 2036 and I for one can’t wait,” tweeted former presidential candidate Hillary Clinton.
A graduate of Harvard University, Gorman says she overcame a speech impediment in her youth and became the first U.S. National Youth Poet Laureate in 2017.
She has now joined the ranks of august inaugural poets such as Robert Frost and Maya Angelou.
Her social media reach boomed, with her tens of thousands of followers ballooning into a Twitter fan base of a million-plus.
“I have never been prouder to see another young woman rise! Brava Brava, @TheAmandaGorman! Maya Angelou is cheering—and so am I,” tweeted TV host Oprah Winfrey.
Gorman’s books are both due out in September.
Third on Amazon’s best selling list was another picture book linked to politics and projecting hope: ‘Ambitious Girl’ by Vice-President Kamala Harris’ niece, Meena Harris.
(Reporting by Umberto Bacchi @UmbertoBacchi, Editing by Lyndsay Griffiths. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)
Why brands harnessing the power of digital are winning in this evolving business landscape
By Justin Pike, Founder and Chairman, MYPINPAD
Delivery of intuitive, secure, personalised, and frictionless user experiences has long been table stakes in digital commerce, well before the era of COVID-19. As businesses harness the revolutionary power of digital technologies, they have pursued large-scale change to adapt to evolving consumer preferences (some more successfully than others, but that’s a blog for another day). Digital transformation is a term we hear repeatedly, and it looks different for each organisation, but essentially, it’s about utilising technology and data to digitise, automate, innovate and improve processes and the customer experience across the entire business.
As I said, this was already well underway but then came 2020 and no industry escaped the disruption of the coronavirus outbreak, which has had an indelible impact on businesses performance, operations, and revenue. Regardless of whether the impact of COVID has been very positive or very challenging, it has forced organisations globally to re-evaluate and re-orient strategies to adapt.
As lockdowns and pandemic-related restrictions continue to change daily life, this raises the question of how we can balance a dramatic shift to digital and the benefits it brings, while ensuring business continuity and innovation both during and post-COVID, and protecting everyone against fraud?
Digital is an essential survival tool, and even more so in a COVID world
No one could have predicted the dramatic digital pivot that has taken place over this year. Indeed, within weeks of the COVID outbreak cash usage in the UK dropped by around 50%. Digital solutions including delivery applications, contactless payments, mobile commerce, online and mobile banking have become essential components of a touchless customer experience in the era of social distancing. It’s no longer just about an enhanced and superior customer experience, it’s also about health, safety and survival.
In store, businesses have benefited from contactless payments enabling faster throughput and reduced need for consumers to touch payment terminals (therefore requiring greater cleaning, which degrades the hardware much faster). Mastercard reported a 40% increase in contactless payments – including tap-to-pay and mobile pay – during the first quarter of the year as the global pandemic worsened. Digital has also become an essential sales channel for many B2C brands. Where brick and mortar stores have been required to close, digital commerce enables continuity of customer relationships and revenue. This channel also provides brands with rich customer data, which can be used to enhance and personalise the customer experience and typically results in greater levels of engagement and uplifts in revenue.
Industry forecasts estimate that worldwide spending on the technologies and services enabling digital transformation will reach GBP 1.8 trillion in 2023 – a clear indication that the process represents a long-term investment and a global commitment to digital-first strategy. The key point here is that digital brings significant benefits, and regardless of COVID, is here to stay.
The challenges that rapid digital transformation brings to businesses
Regardless of whether businesses are operating in developed or less-developed economies, these times of crisis have levelled the playing field in the sense that all businesses are facing similar issues. Access to products and supplies, maintaining customer relationships, accelerating sales for some and declining sales for others, health and hygiene are just a few of the unique challenges brought about by COVID.
Many businesses in physical environments have had to swiftly implement changes to significantly reduce safety risks for staff and customers, such as contactless payments, mobile ordering and delivery options. But with these changes come a host of other benefits of digitisation, such as faster transactions, and reduced human error at the point-of-sale.
The reliance on technology, however, can also expose organisations and consumers to certain vulnerabilities. In particular, the risks of fraud and cybercrime have dramatically increased since the onset of the pandemic as scammers have taken advantage of digital technologies to target both businesses and individuals.
As a McKinsey report illustrates, new levels of sophistication in the activities of fraudsters have placed more pressure on companies that have been previously slow to go digital, bringing “into sharp relief how vulnerable companies really are”, and damaging the financial health of small and large businesses. In fact, the Bottomline 2020 Business Payments Barometer reveals that only one in 10 small businesses across the UK report recovering more than 50% of losses due to fraud.
But take these stats with a grain of salt. While it is important to be aware of the risks and challenges this new business landscape brings, it’s equally as important to have a lens firmly across your own business, industry and audience, and to identify the changes you can make internally to mitigate risk as well as improve your customer experience. Where can you make some quick wins? Do you have the right skillsets internally to achieve what you need to achieve? What technology is out there that will enable your business goals? There are tech companies like MYPINPAD that are making huge strides in software development, which will transform businesses globally.
A digital world post-COVID
Almost a year in, the line between business success and failure remains fragile. However, an ongoing transition towards greater digitisation will be the difference between survival and the alternative.
There is a wide range of initiatives businesses can implement to weather this storm. If we look at the space MYPINPAD operates within, secure digital consumer authentication is crucial to the ongoing success and security of not only financial products but also identification and verification across a range of different industry verticals. Shifting the authentication of consumers securely onto mobile devices enables businesses to completely reshape their customer experiences. By bringing together a more seamless, frictionless customer experience, accessibility, privacy, security and access to consumer data, businesses are able to drive digital transformation across day-to-day activities.
Against this backdrop, software with stronger security standards continue to play an ever more vital role in supporting society, protecting consumers and businesses from the increase in risks that rapid digitisation brings. Already, merchants can deploy PIN on Mobile technology from companies like MYPINPAD, onto their smart devices to speed up the digitisation process many are now tackling.
Essentially, opening up universal payments and authentication methods that feel familiar, for both online and face-to-face transactions, will be key to opening up a world of possibilities when it comes to redefining how businesses engage with consumers.
Brexit responsible for food supply problems in Northern Ireland, Ireland says
LONDON (Reuters) – Food supply problems in Northern Ireland are due to Brexit because there are now a certain amount of checks on goods going between Britain and Northern Ireland, Irish Foreign Minister Simon Coveney said.
British ministers have sought to play down the disruption of Brexit in recent days.
“The supermarket shelves were full before Christmas and there are some issues now in terms of supply chains and so that’s clearly a Brexit issue,” Coveney told ITV.
The Northern Irish protocol means there are “a certain amount of checks on goods coming from GB into Northern Ireland and that involves some disruption,” he said.
(Reporting by Guy Faulconbridge; Editing by Tom Hogue)
The Beaconsoft story and introducing its one-of-a-kind digital campaign intelligence platform
By Nigel Bridges, founding CEO of Beaconsoft Limited What were you doing prior to setting up Beaconsoft? Before setting up...
Top 8 Tax Scams to Watch Out For
It is tax time and that means finding the best way to file your taxes and to get a refund...
Hisham Itani and Resource Group Recognized in the 2020 Global Banking & Finance Awards®
Global Banking & Finance Review has awarded Hisham Itani the Chairman and CEO of Resource Group, Technology CEO of the...
Euro zone business activity shrank in January as lockdowns hit services
By Jonathan Cable LONDON (Reuters) – Economic activity in the euro zone shrank markedly in January as lockdown restrictions to...
Volkswagen’s profit halves, but deliveries recovering
BERLIN (Reuters) – Volkswagen reported a nearly 50% drop in its 2020 adjusted operating profit on Friday but said car...
Global chip shortage hits China’s bitcoin mining sector
By Samuel Shen and Alun John SHANGHAI/HONG KONG (Reuters) – A global chip shortage is choking the production of machines...
Iran’s oil exports rise ‘significantly’ despite sanctions, minister says
DUBAI/LONDON (Reuters) – Iran’s oil exports have climbed in recent months and its sales of petroleum products to foreign buyers...
Nissan to source more UK batteries as part of Brexit deal ‘opportunity’
By Costas Pitas LONDON (Reuters) – Nissan will source more batteries from Britain to avoid tariffs on electric cars after...
Muted recovery for UK retailers in December ends worst year on record
By David Milliken and Andy Bruce LONDON (Reuters) – British retailers struggled to recover in December from a partial coronavirus...
Chinese phone maker Honor partners with key chip suppliers after Huawei split
By David Kirton SHENZHEN, China (Reuters) – Chinese budget phone maker Honor said on Friday it had signed partnerships with...