IT services major Tech Mahindra on Monday said that it will acquire 100 per cent stake in US-based Zen3 Infosolutions for Rs 460 crore (or $64 million) in an all-cash deal. The company will complete the acquisition through its subsidiary, Tech Mahindra (Americas), Inc.
"The board of directors of the company has approved the proposal to acquire 100 per cent stake in Zen3 Infosolutions (America) Inc. directly and through its wholly-owned subsidiary, Tech Mahindra (Americas), Inc," Tech Mahindra said in a filing to the Bombay Stock Exchange.
Headquartered in Seattle, Zen3 is a software solution company with offices in Dublin, Hyderabad, Vishakhapatnam and Bengaluru. The company, which has over 1,300 employees, reported revenue of $25 million for the six-month period ended June 30, 2019. Revenue for the financial year ended December 31, 2018, stood at $35 million.
As per the agreement, Tech Mahindra will pay $ 42 million (or about Rs 300 crore) at closing of the deal and the remaining $22 milllion will be paid over three years linked to the financial performance of the company.
Tech Mahindra expects the deal to close by April 1, 2020.
The acquisition of Zen3 Infosolutions will help Tech Mahindra in bolstering its enterprise application practice and capabilities, the company said. "It has strong capabilities in artificial intelligence (AI) enablement services, Al Speech solutions, Cloud engineering, software product engineering and DevOps," it added.
In a separate filing, Tech Mahindra announced a dividend of Rs 10 per equity share for 2019-20. While the record date for dividend declaration is March 3, 2020, the dividend payment date is March 9, 2020.
"It has been a quarter of strong growth with substantial operational and financial metrics improvement. This quarter also witnessed healthy cash flow generation, and with a view to returning enhanced value to our shareholders, we are announcing an interim dividend of Rs 10 per equity share i.e. 200 per cent," CP Gurnani, Managing Director and Chief Executive Officer, Tech Mahindra said.
Ahead of the announcement, shares of Tech Mahindra closed Monday's trade at Rs 820.15 apiece, down 1.13 per cent, on the BSE.
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