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India tech firm buys AlbionOrion for US$63.65 mil

India's SSI Ltd announced on Monday the largest cross border takeover by an Indian technology firm with a plan to buy US-based AlbionOrion Company LLC (AOC) for US$63.65 million in a cash-cum-stock deal.
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Written by ZDNet Staff on
India's SSI Ltd announced on Monday the largest cross border takeover by an Indian technology firm with a plan to buy US-based AlbionOrion Company LLC (AOC) for US$63.65 million in a cash-cum-stock deal.

BOMBAY (Maxis Net) - SSI said it would pay US$20 million in cash and issue 6.5 million Global Depositary Shares (GDS) as consideration for the remaining US$43.65 million.

Earlier deals like DSQ Software's buyout of San Vision Technology for US$30 million in July and Polaris Software's acquisition of Data Inc. for US$21 million in May were smaller.

SSI shares, which fell in early trade tracking overrall weakness recovered to trade flat at 2,700 rupees while the broader Bombay Stock Exchange index was down 2.50% at 4,450.41.

AOC to later merge with SSI
AlbionOrion is a Delaware-based firm with vertical domain expertise in telecommunications, health and human services as well as insurance.

Its sales at US$27 million for the year ended March 2000 are expected to grow about 30% in the current fiscal year, a statement from the company said. The company has an order pipeline of US$27 million as on date, it said.

SSI, based in the southern Indian city of Madras, operates two divisions, for software development and consulting and education. Kalpathi S Suresh, chief executive officer of SSI, said AOC would now operate as a subsidiary but would eventually merge with SSI.

"We do not want to operate two different companies. As we go along, we plan to convert it into a division," he said on the sidelines of a news conference in Bombay.

"At the SEBI preferential price of around 3,070 per share, the issue of GDS's would amount to US$43.65 million," Suresh said.

"This transaction will lead to an equity dilution of about 5% and is expected to result in a substantial EPS (earnings per share) accretion." He said 100 of AOC's clients are among Fortune 1000 companies. "In terms of value, it gives us tremendous strength in verticals of insurance, healthcare and telecom," he said.

K. Shriniwas, CEO of SSI Technologies, said he expected increased profits from the acquisition. "This acquisition will strategically position SSI Technologies to leverage its offshore development capabilities and increase our profitability through synergies arising out of the combination," he said.

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