R Systems International, a software company with revenues of Rs 320 crore, acquired Computaris International, a UK-based telecom software services company. It will pay £9 million or about Rs 70 crore to buy the company, with about half the sum being paid upfront and the remaining being paid over a period of two years, tied in to performance. The company’s share price was up by about 6% at the time of posting.
R Systems has said that it will fund the acquisition through internal accruals. In the nine months ended September 2010, the company’s sales had fallen by 14% to Rs 217 crore, over the same period a year ago, and profit before interest and tax had nearly halved. But it still earned a net profit of Rs 12.5 crore compared to Rs 1 crore, chiefly due to exceptional items. The decline was chiefly due to a sharp drop in revenues in its business process outsourcing segment, though software development and customisation revenues too were down by a bit.
Computaris sells telecom rating and billing solutions to service providers in countries such as USA, UK, Romania, Poland and Malaysia. Its 2010 revenues is about £9 million pounds, which values the company at 1 time sales. The existing management would continue to stay on even after the acquisition. Ian Tidder, CEO and co-founder said: “In addition to the expansion of our European operations, we intend to continue to grow our Asian and USA operations…”
The deal will see R System’s annualised sales for 2011 rise by about 23%. The impact on profits will be known later, because the company has not shared details about the target’s profitability.