Source: Virtusa
Virtusa Corporation (NASDAQ:VRTU), a global IT services company that offers a broad spectrum of business consulting and outsourcing services, announced that on July 1, 2011, Virtusa acquired substantially all of the assets of ALaS Consulting LLC ("ALaS"), a leading provider of consulting and advisory services to financial services companies.
The acquisition expands Virtusa's leading position within the banking and financial services industries (BFS) by adding capital markets and investment banking domain expertise, consulting and program management skills. ALaS provides Virtusa with approximately 150 practitioners, including former senior Wall Street professionals with significant industry experience, driving critical initiatives in areas such as regulatory compliance; trading desk operations improvement and controls; software package selection, program management and functional testing; and increasing automation to reduce costs.
ALaS currently works with leading global financial institutions and maintains relationships with key decision makers within these organizations. Virtusa will provide the combined client base an integrated offering, including deep domain knowledge, consulting-led solutions, technology implementation and industry leading global delivery execution. Virtusa will target this integrated offering to simplify complexities and accelerate business outcomes for banking and financial services institutions.
Kris Canekeratne, Virtusa's Chairman and CEO, stated, "We are pleased to welcome the ALaS team to Virtusa. Erik DiGiacomo, President of ALaS, will lead our new capital markets line of business. This acquisition will further enable Virtusa to identify and execute transformational programs, take on the downstream technology implementation and strengthen Virtusa's strategic position across its BFSI client base."
Financial Overview of Transaction
Under the terms of the asset purchase agreement, Virtusa acquired substantially all of the assets of ALaS for an aggregate cash consideration of $27.8 million, of which 10% has been held back by Virtusa for a period of 12 months as security for the sellers' indemnification obligations under the asset purchase agreement. As part of the transaction, substantially all of the employees of ALaS, including the management team, accepted employment with Virtusa. Virtusa has agreed to issue an aggregate of up to $4,000,000 in shares of restricted stock from Virtusa's stock option and incentive plan, not to exceed 250,000 shares, to these new Virtusa employees. The shares will vest annually over a four year period.
For the fiscal year ended March 31, 2012, Virtusa management currently expects ALaS to contribute revenue of approximately $24.0 million to $26.0 million. Virtusa also currently expects the acquisition to be accretive to fiscal year 2012 earnings per diluted share by $0.01 to $0.05, inclusive of transaction and amortization expenses. Transaction expenses are expected to be approximately $450,000 of which approximately $375,000 have been incurred in the first fiscal quarter ended June 30, 2011.