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Construction : Deals | September 2012 | Source : Construction Update

Tech Mahindra buys major stake in Comviva

Tech Mahindra to acquire 51 per cent stake in mobile value-added services (VAS) provider Comviva Technologies, a Bharti Group company, for Rs 260 crore. The acquisition is expected to shore Tech Mahindra's top line.

With the new brand identity, Mahindra Comviva, the mobility business of Tech Mahindra and Mahindra Satyam combined is expected to clock revenues of Rs 1,000 crore by March 2013. Comviva was founded in 1999 as Bharti Telesoft. It changed its name to Comviva Technologies in 2009

Currently, Tech Mahindra and Mahindra Satyam get around Rs 500 crore of revenues from their telecom mobility business, which includes providing software and billing systems. Comviva gets an annual revenue of Rs 400 crore. The operating margins of the company are in mid-teens.

C. P Gurnani, Managing Director, Tech Mahindra, said that by March 2013, the combined mobility practice of the group, which will include revenue of Tech Mahindra, Mahindra Satyam and Comviva, along with CanvasM (another group company), should be around Rs 1,000 crore. The deal will be earnings per share-accretive from the first year.

As part of the deal, Tech Mahindra, the country's sixth-largest software provider, is making an up-front payment of Rs 125 crore for the stake and the remaining Rs 135 crore will be paid over a five-year period based on the company achieving mutually-agreed performance targets. The deal will be funded through internal accruals.
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