The deal is a combination of cash and stock swap, with the former accounting only for over 10 per cent of the deal size. According to the industry buzz, the deal is estimated to be over $20 million, however TechSpan chairman and chief executive officer Mr Malhotra (also the co-founder of HCL Group) was tightlipped.
The two companies have been fully merged both financially and operationally. We are not divulging the financial details of the merger but it is over $10 million, Mr Malhotra told eFE.
The combined entity has almost $100 million in revenue and 900 employees worldwide (with 400 people from TechSpan), and will continue to operate under the Headstrong name.
The merger, according to Mr Malhotra, will provide TechSpan a global footprint, multi-shore development capability and consulting services capability.
Post-merger, we will have an additional offshore development centre in Manila. By December 2004, Headstrong intends to add 1000 people in its offshore development centres and we expect at least 600 people added in the Indian offshore development centres, he said. TechSpan had one offshore development centre each in Delhi and Bangalore with 400 people.
Arjun Malhotra held around 7 per cent in TechSpan and his stake in Headstrong is below 5 per cent now. Goldman Sachs, Walden and Mr Malhotra who will head the Indian delivery centres together hold around 30 per cent. Goldman Sachs had 35 per cent while Walden had 10 per cent in Techspan.
Kevin Dougherty, the former president and CEO of Headstrong, will remain president and CEO of the combined company and Mr Malhotra will serve as the chairman of the board for the combined company.
Headstrong is headquartered near Washington DC, with a global presence across North America, Europe and Asia-Pacific.