INDIA BUSINESS WORLD - JUNE - JULY - 2007
The Month that was ...

MEGASOFT IS ACQUIRING US BASED BOSTON COMMUNICATIONS GROUP FOR $65M

MEGASOFT, a product development company focused on telecom vertical, is acquiring US based Boston Communications Group (BCGI) for a consideration of $65 million. The acquisition of the Nasdaq-listed BCGI will help Megasoft to get a strong foothold in North American and Latin American markets.

"With this, our clients will go up from 35 to 70 and it is expected to add about $18 million to our revenue this fiscal," said Megasoft managing director and chief executive GV Kumar. The BCGI acquisition comes a year after Megasoft acquired Hyderabad-based Visual Soft for about Rs 172 crore.

Addressing a press meet on Wednesday, he said, the tender process for acquiring all the outstanding shares of BCGI common stock would begin in August. "Our aim is to acquire 100% stake in the company including about 5% stock held by the promoters at $3.6 per share in cash. The acquisition will be funded through internal accruals," he said. Megasoft is paying a premium of about 120% over BCGI's average closing share price during the last 30 days ended July 6.

BCGI employs about 360 people while Megasoft has an employee base of 1,250. As both the companies link technology with services, the acquisition will help create a platform to add next-generation, high-value products in the telecom sector. BCGI's clientele include Telefonica and Sprint.

"BCGI has strong products in the pre-paid segment and payment services. As its model is based on managing hosted services, the acquisition will help us strengthen our product portfolio to become a convergent telecom provider," said Mr. Kumar.

According to him, revenue from the acquisition will be reflected in Megasoft's fourth quarter revenue. "We will complete the acquisition process by the end of the third quarter. This fiscal, we expect to clock $100 million revenue, of which BCGI's contribution will be about $18 million," he said. Last year, the company recorded revenue of Rs 180 crore.

As part of its future plans, the company is setting up Rs 100-crore campus in Hyderabad, which will be completed by April next year.