Infotech Enterprises has announced that its US subsidiary, Infotech Software Solutions Inc, has acquired Vargis LLC, US, in an all cash transaction for $2.65 million (Rs 12 crore).
The transaction also comprises an additional $ 0.45 million (Rs 2 crore) earn-out that is payable at the end of the current calendar year based on pre-agreed performance criteria.
"We have set a certain profitability target for Vargis to achieve by December end, only on achievement of which, we will pay the additional consideration," B V R Mohan Reddy, chairman and MD.
Vargis posted unaudited revenues of $7.2 million for the year ended December and earned about 8 to 10 per cent of the revenues as profits.
The eight-year-old company is engaged in the management, acquisition and delivery of mapping and geospatial products to government and commercial clients. It has about 30 people on rolls.
Infotech's GIS revenue for the trailing 12 months to December 31, 2003, was Rs 54.8 crore (Rs 548 million). "With this acquisition, we have become a $20 million combined entity and the largest GIS company in the country," Reddy claimed.
Vargis will retain its management team and will operate as an independent entity. It would lead all GIS initiatives of Infotech into the North American market except for existing strategic relationships.
The buyout gives Infotech a platform to address the geospatial needs of government, utility, telecom and transportation clients in the US and will enable the company to reinforce its strategic position in the world's largest GIS market.
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