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ROLTA India has chosen the inorganic way to expand its global reach. The company has announced the acquisition of Orion Technology—a Canadian company engaged in web-based geospatial information systems (GIS) solutions. Though the Rolta management has not provided any information on the valuation, the deal size is expected to be less than two-times the annual earnings of the target company. Investors seem to have reacted to this development with caution. The Rolta scrip has gained 2.2% since the announcement compared with over 4% jump in the BSE IT index.

This is the first-ever acquisition for Rolta, which had focused on organic growth all this while. Considering the buoyancy in global demand for GIS solutions along with increasing use of locational services, an international acquisition makes sense for Rolta.

This takeover will help Rolta in two ways. It will strengthen Rolta’s position in the North American GIS market where Orion has a significant presence. The company also gets access to the latest technologies in this space. Rolta’s position in the global GIS segment will be stronger boosted by its offerings. The company expects to generate $100 million worth business in next five years through this acquisition. This will take it closer to its objective of having a billion dollar in revenue by then. The deal will be EPS accretive given that Orion runs a profitable operation.

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