Asian private equity firm snaps up cloud specialist Virtusa in $2B deal

Asian private equity firm snaps up cloud specialist Virtusa in $2B deal

Board of directors received “unsolicited proposal from an interested party” to acquire the business on 20 July

Credit: Virtusa

Baring Private Equity Asia (BPEA) has unveiled plans to acquire cloud specialist Virtusa in an all-cash transaction valuing the technology provider at approximately US$2 billion.

In acquiring all outstanding shares of common stock for $51.35 per share, the transaction is expected to close during the first half of 2021, subject to shareholder approval and customary regulatory requirements.

Founded in 1996 with a strong Asia Pacific heritage, Virtusa provides deep solution expertise across Amazon Web Services (AWS), Google Cloud and Microsoft technologies, in addition to partnerships with Adobe, SAP, Salesforce and Talend among others.

Housing more than 22,700 employees, Virtusa goes to market across over 50 locations spanning 19 countries in North America, Europe and Asia Pacific. Closer to home, regional reach covers Australia and New Zealand, alongside Southeast Asia, India and Sri Lanka.

Key customers primarily include Fortune 2000 businesses, ranging from banking and financial services to communications, healthcare and life sciences, as well as insurance, manufacturing, media and entertainment, travel and hospitality sectors.

“This transaction represents a strategic evolution for Virtusa and a unique opportunity to take our business to new heights at a time of accelerating digital adoption,” said Kris Canekeratne, chairman and CEO of Virtusa.

“The benefits of this transaction extend to all Virtusa stakeholders, including our shareholders, who will receive immediate and substantial cash value, as well as to our team members, since BPEA has an exemplary track record of valuing innovative and talented global teams and supporting and empowering the businesses in which it invests. With a strong partner in BPEA, we will solidify our position at the forefront of digital transformation for years to come.”

As outlined by Canekeratne, the board of directors received an “unsolicited proposal from an interested party” to acquire the business on 20 July. Following receipt of the offer, the board subsequently authorised engagement with other potential strategic buyers and financial sponsors regarding a potential acquisition of Virtusa.

As part of this process, the organisation signed non-disclosure agreements with five parties and engaged with two others.

After an independent review of the alternatives available - "including the value creation opportunity through continued execution of the company’s strategic plan" - the Virtusa board "unanimously" accepted the offer on the table from BPEA.

“Through this transaction, we are pleased to maximise value and deliver a significant, immediate cash premium to Virtusa’s shareholders,” added Rowland T. Moriarty, lead independent director at Virtusa.

“This announcement is the culmination of a process by Virtusa and our financial advisors, which included engagement with strategic and financial parties regarding a potential transaction, and, after a thorough review, the board unanimously concluded that this all-cash premium transaction with BPEA achieved the board’s objective.”

Founded in 1997, BPEA is recognised as one of the largest independent private equity firms in Asia with approximately $20 billion of assets under management.

“Technology is continuing to drive marketplace evolution at an unprecedented pace, creating new opportunities as well as complexities,” added Jimmy Mahtani, managing director of BPEA. “Virtusa’s global team of talented professionals, software engineering heritage, and deep domain expertise position it uniquely to help enterprises across industries accelerate their most strategic digital and cloud transformation initiatives.”

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