Philadelphia-based AppLabs Technologies Private Limited, a software testing, quality assurance and software development services company, is all set to acquire a US-based software testing firm at an investment of Rs 30 crore (Rs 300 million).
The Rs 45-crore (Rs 450 million) company, which has its offshore technology centre in Hyderabad, is making the acquisition through a part cash/part stock deal, and a formal announcement of the acquisition will be made within two weeks. The acquisition will make AppLabs the largest independent testing company in India.
Speaking to Business Standard, Sashi Reddi, founder and CEO of AppLabs Technologies, said: "We passed through the final stages of negotiations for the acquisition. The acquisition will cost us Rs 30 crore on a part cash and part stock basis." He, however, declined to spell out the name of the US firm.
"The company that we are acquiring has a workforce of 45. We are at present working on the legal aspects of the acquisition and an agreement between the two companies is yet to be signed. We will make an official announcement on this within two weeks from now," he said.
It may be recalled that AppLabs had, in August 2004, announced that it was in talks with three major companies in the US for an acquisition. Subsequently, AppLabs has received $7 million in equity financing from the Mauritius-based WestBridge Capital Partners, in October 2004.
Later, AppLabs and WestBridge engaged Charlotte-based DecisionPoint International, a boutique investment bank specialising in merger and acquisition services for technology companies in the IT services, communications, software and internet sectors, to advise AppLabs on acquisition targets in the software testing services space.
It is through DecisionPoint that AppLabs is acquiring the US-based firm.
The company is planning to beef up its presence in India as well. The company is at present looking at acquiring a company offering solutions to the financial services industry in India.
"We are currently on the lookout for a 200-300 employee-size company in India. We have earmarked between Rs 20 crore (Rs 200 million) and Rs 25 crore (Rs 250 million) for this purpose. Once we acquire the Indian company, which is likely to happen in 2005 itself, we plan to add our software testing expertise to the existing staff and convert the firm into our backend office," he said.
AppLabs at present has a headcount of 500 at its offshore technology centre in Hyderabad. The company plans to ramp up the headcount to 800 by the end of calendar year 2005.
The company's revenues and profits doubled for the third consecutive year. AppLabs' revenues grew 140 per cent and profits increased by over 190 per cent in 2004 as compared to 2003. The company expects to close the 2005 calendar year with a turnover of over Rs 100 crore (Rs 1 billion).
