Mumbai, Oct 3: Silverline Technologies, listed on the NYSE and the BSE, acquired a US $24.3 million Hong Kong-based IT consultancy firm -- Sky Capital International (SCI) -- in a US $22 million all-cash deal. The valuation for the company has been done by PriceWaterhouse Coopers and a `fairness opinion' has been provided by Salomon Smith Barney, according to a company press release.SCI, which is one of Silverline's largest customers, has an existing client base of companies like American Express, AT&T, Cable and Wireless, Cathay Pacific, First Data Corporation, Lehman Brothers and Standard Chartered. The company has been promoted by Australian entrepreneur Grahame Simmons, who holds a 95% stake in the company -- the remaining 5% is with the company's employees.
Speaking to eFE, Shankar Iyer, president and CEO, Silverline Technologies, indicated that the company has cash reserves in the region of about $50 million from the company's recent $100 million ADR issue and has retained Salomon Smith Barney and Broadview Associates, a US-based firm specialising in M&A operations to structure similar deals in the coming months.
``The nature of the deals will vary from market to market. While US companies prefer stock transactions, companies in Europe and the Asia Pacific prefer cash deals, hence the acquistions will be structured acccordingly. But you can certainly expect to hear of more deals in the coming months.'' says Iyer.
Reacting to the news of the SCI acquistion, the Silverline stock climbed 2.3% from the previous day to close at Rs 365.4.
Silverline has acquired a 100% stake in the company and its key employees, numbering about 18 who held stock in SCI, will be paid proceeds of the transaction, says to Grahame Simmons, founder and chairman, SCI. ``We gain financial and logistical resources as part of the Silverline Group and can also ramp up our production capacity through resource sharing within the group.'' Simmons, along with other key management members, will be retained in the company as per the deal.
One of the key aims of this acquisition has been to diversify Silverline's revenue streams and reduce dependance on US revenues and also gain access to SCIs' 50-odd clients. ``Our immediate target markets through this acquisition are Hong Kong and Japan since SCI has an existing client base in these countries. We are also targetting the Australian market given Simmons' links with this market,'' says Iyer.
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