Source: EDB Business Partner
EDB Business Partner has entered into an agreement to purchase 50.1% of the Indian IT company Span Infotech.
EDB also has an option to acquire the remaining shares in the company. This acquisition represents one of the largest-ever investments by a Norwegian IT company in Asia. Span has around 550 highly qualified employees, and will make a significant contribution to EDB's strategy for using global service resources.
"The acquisition of Span in India is an important step in our commitment to building a long-term Global Sourcing strategy for EDB. Through this transaction, we will materially increase both our delivery capacity and competitiveness, and the new Indian unit, together with our Ukrainian operations, will help to ensure EDB's strength for many years to come", comments Endre Rangnes, CEO of EDB Business Partner.
EDB sources capacity from cost-effective countries
The acquisition of Span is an important element in EDB's work on developing an offer for customers that combines delivery from its Nordic activities with delivery from cost-effective countries. Increasing numbers of customers now expect this kind of delivery model and make it part of their requirements. EDB has been working for some time on a comprehensive project to develop a model for Global Sourcing that meets the needs of these customers. As part of this strategy, EDB has established sizeable operations in the Ukraine through acquisitions earlier this year.
Through the acquisition of Span and the acquisitions in the Ukraine, EDB has added around 1,200 highly qualified IT professionals to the Nordic IT market. EDB now has 23% of its employees in cost-effective countries. EDB has extensive plans for further recruitment to its operations in India and the Ukraine.
EDB will continue to have a strong local base in the Nordic countries, but intends to combine this with the use of global service resources. In a Nordic labour market characterised by high costs and a shortage of resources, the combination of global service resources and EDB's Nordic operations will significantly strengthen EDB's market position and competitiveness.
Span was established in 1993. The company now has about 550 highly certified employees working at 3 office locations in Bangalore, India. Span reported revenue of USD 7.8 million in its most recent financial year, equivalent to around NOK 44 million. The company expects revenue growth in excess of 50% in 2007, with profitability in line with the equivalent activities at EDB. About 80% of Spans' revenue comes from the USA, with the remainder from Scandinavia. The company's most important customers include a number of financial institutions. Span principally works in the areas of applications development and applications management.
About the transaction
EDB is to acquire 50.1% of the share capital of Span Infotech. EDB is to pay USD 3.8 million upon acquiring the shares. It has also agreed to pay further consideration dependent on the company's future revenue and earnings. EDB has an option to acquire the remaining shares in the company after 3 years. EDB is purchasing the shares from the current management of Span, who have agreed to remain with the company following the acquisition. Span will continue to operate as an independent company in the EDB group. It is expected that the acquisition will be implemented towards the end of the fourth quarter of 2007.