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SSI to acquire US firm in $64-m stock, cash deal


Our Bureau

MUMBAI, Sept. 18

THE Chennai-based SSI Ltd has announced that it will acquire AlbionOrion Company (AOC) llc, US, an IT solutions provider, for $63.65 million in a stock and cash deal.

SSI will pay $20 million in cash and issue about 6.5 million global depository shares (GDS) aggregating $43.65 million on preferential basis.

``Ten GDS will be equivalent to one underlying equity share of Rs 10 each. The GDS will be issued as per the SEBI preferential pricing formula which works out to around Rs 3,070 per share,'' said Mr Suresh Kalpathi, Chairman and CEO, SSI, at a press meet held here on Monday. The transaction will lead to an equity dilution of around five per cent, he added.

SSI shares closed at Rs 2,622.90 on the BSE on Monday as against Rs 2,700.75 on Friday, registering a drop of Rs 77.85.

AOC, promoted by Mr P.V. Potluri, has vertical domain expertise in telecommunications, healthcare and insurance and provides high-end IT solutions in e-business technology, supply chain management, CRM and ERP implementations.

``AOC's operations complement the SSI Technologies' business model which also has strong domain skills in telecom, healthcare and insurance,'' Mr Kalpathi added.

``Our post-acquisition estimates of revenue from education software was 56 per cent and from technologies was 44 per cent. But after the acquisition, we expect consulting and technologies to contribute 60 per cent and education the remaining 40 per cent, '' he said. Apart from the additive advantage to SSI, the acquisition will also help establish an off-shore presence for AOC, he added.

AlbionOrion was formed earlier this year from the acquisition of two US companies -- Albion International and Orion Consulting -- by Mr Potluri. It also has a 35 per cent stake in Albion Connect, a product company offering OSS telecommunication products.

``After the acquisition, the two divisions will function independently, but we will set up key committees to oversee the integration of the companies,'' said Mr Shriniwas, CEO, SSI Technologies.

The integration will take place in four steps, he said. The first phase will involve establishing a common marketing programme by October 2000. The second phase will include an integrated project execution and delivery model for the group.

The third step will be the synchronisation of systems and processes and the last will be an active integration of all areas of operation. ``The outer limit for completion of the entire process will be around the second quarter of 2001,'' added Mr Shriniw as.

Pic.: Mr Prasad V. Potluri, Promoter of Albion Orion, and Mr Suresh Kalpathi, Chairman and CEO, SSI, at a press meet in Mumbai to announce the acquisition of Albion Orion Compant LLC, US.

Pic. credit: Paul Noronha

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