Mastek Acquires STG International For $29 Million

Mastek, a $184 million IT solutions company, has acquired Systems Task Group (STG) International Ltd, an IP-based enterprise solutions provider to the North American property and casualty insurance industry, for $29 million. This acquisition is the second such initiative by Mastek during the current financial year and follows the acquisition of another insurance-focussed IT company Vector Insurance Services in July 2007.

As per the agreement, Mastek, through its wholly owned US subsidiary MajescoMastek, will be acquiring a 100 per cent equity stake in STG International Ltd in an all-cash transaction for $29 million, with 85 per cent of the total consideration payable at this time and the remainder to be linked to ongoing performance and paid by way of earn-outs. Following this transaction, STG will operate as 'STGMastek'.Commenting on the acquisition, Sudhakar Ram, chairman and MD, Mastek, said, "STG enjoys very strong brand recognition and has over the years built a satisfied customer base in the P&C insurance industry. With STG's established strengths in the P&C segment complementing our own competencies in the life and annuity segment, our status as a leading IP-based enterprise-wide solutions provider in the insurance vertical will be reinforced with this initiative."Shared Praful Nikam, chairman and founder, STG, "We are very enthusiastic about the opportunities presented by joining Mastek. They have world-class processes and capabilities, as well as a global presence and strong intellectual property. We believe that our existing and future customers will substantially benefit from the size and scale of Mastek and their superior system integration capabilities and processes."The acquisition will be value accretive to Mastek both financially and operationally. STG reported revenues of $17 million and an EBITDA of $1.73 million for the financial year ended 31 December 2007. The integration of STGMastek with Mastek's existing operations is likely to be completed in about 90 days (i.e. by June 2008), and its contribution will be reflected in Mastek's consolidated performance partly in FY2008 and fully in FY2009. The STG management team, including its founder Praful Nikam, will continue to be actively involved in its operations and support William McCarter, who will be taking over as president of STGMastek. All other managers and employees, including about 350 professionals with extensive experience in the P&C insurance segment, will also be retained and will continue to support Mastek in its objective to grow its insurance vertical business in North America.
Source: Business Wire India