Apparatus President: Room to Grow in Indy
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowThe president of Indianapolis-based Apparatus says there is still room for growth in the city after its acquisition by Virtusa Corp. in Massachusetts. Aman Brar does not anticipate any negative impact on the local operation's more than 200 employees. The companies announced the $34 million cash deal Wednesday. April 1, 2015
News Release
WESTBOROUGH, Mass. – Virtusa Corporation (NASDAQ GS: VRTU), a global IT services company that combines innovation, technology leadership and industry solutions to transform the customer experience, today announced that it has acquired all the outstanding shares of Apparatus, Inc., a leading provider of end-to-end IT infrastructure services headquartered in Indianapolis, Indiana.
With over 200 employees, Apparatus provides consulting, service design, and delivery of infrastructure management services, helping its clients improve the operational efficiencies of their IT investments.
The acquisition strengthens Virtusa's growing Infrastructure Management Services (IMS) practice with the addition of Apparatus' Kore Managed IT Solutions platform. Virtusa will deliver remote infrastructure management (RIM) services from Apparatus' RIM center. The combined entity will offer clients a stronger set of offerings that are sharply focused on simplifying their IT infrastructure and driving high levels of efficiency in IT operations.
Apparatus delivers its Kore Managed IT Solutions through a technology platform supported by optimized processes and solution frameworks that allow Apparatus to proactively and cost-effectively manage IT infrastructure for its clients. The Kore platform includes cloud/virtualized infrastructure management; unified communication platforms; collaboration and content management; data management, backup and disaster recovery; and mobile device management.
Kris Canekeratne, chairman and CEO of Virtusa, stated, “We are pleased to welcome the Apparatus team and clients to Virtusa. Apparatus brings superior infrastructure solutions that are complementary to Virtusa's IT outsourcing capabilities. We believe there's strong alignment between Virtusa’s software engineering DNA and Apparatus' automation-first mindset to infrastructure management. This acquisition will help increase our total addressable market and allow us to deliver expanded IT outsourcing service offerings to our clients. In addition, this acquisition is an important step in strengthening Virtusa's position as an end-to-end IT services provider, as we continue to capture larger transformational programs.”
Kelly Pfledderer, founder and CEO of Apparatus, stated, “We are pleased to join the Virtusa team and believe this is a tremendous opportunity to deliver on Apparatus' vision of globalizing both our delivery model and addressable market. Virtusa is committed to Apparatus' presence in Indianapolis, as well as to expanding our global capabilities. With this transaction, we'll further enhance our ability to provide exceptional technology solutions to our clients and channel partners while creating growth opportunities for our employees. We share a strong engineering and innovation culture and are laser focused on client success.”
Financial Overview of Transaction
Under the terms of the stock purchase agreement, Virtusa acquired all the outstanding shares of Apparatus for approximately $34.2 million in cash, as well as up to approximately $3.2 million in earn-out and contingent consideration based upon Apparatus’ full achievement of certain revenue and profit milestones for the fiscal year ending March 31, 2016. Virtusa has also agreed to issue an aggregate of up to $3.5 million in restricted stock awards from Virtusa’s stock option and incentive plan, not to exceed 93,333 shares, to certain Apparatus employees. The restricted stock awards will vest annually over a four year period.
For the fiscal fourth quarter ended March 31, 2015, Virtusa currently expects to incur approximately $200,000 of transaction expenses related to the acquisition of Apparatus.
For the fiscal year ending March 31, 2016, Virtusa management currently expects Apparatus to contribute revenue, including related synergy revenue, of approximately $34 million and to be approximately ($0.06) dilutive to Virtusa’s earnings per share on a U.S. GAAP basis. This is inclusive of approximately $600,000 of transaction expenses, as well as approximately $5.0 million of acquisition-related amortization of intangible assets, earn-out and contingent consideration, and stock based compensation. Virtusa management currently expects the Apparatus acquisition to be accretive to U.S. GAAP earnings per share for fiscal year 2017.
About Virtusa Corporation
Virtusa provides end-to-end information technology (IT) services to Global 2000 companies. These services, which include IT consulting, application maintenance, development, systems integration and managed services, leverage a unique Platforming methodology that transforms clients’ businesses through IT rationalization. Virtusa helps customers accelerate business outcomes by consolidating, rationalizing, and modernizing their core customer-facing processes into one or more core systems.
Virtusa delivers cost-effective solutions through a global delivery model, applying advanced methods such as Agile and Accelerated Solution Design to ensure that its solutions meet the clients’ requirements. As a result, its clients simultaneously reduce their IT operations cost while increasing their ability to meet changing business needs.
Founded in 1996 and headquartered in Massachusetts, Virtusa has operations in North America, Europe, and Asia.
Virtusa, Accelerating Business Outcomes, BPM Test Drive and Productization are registered trademarks of Virtusa Corporation. All other company and brand names may be trademarks or service marks of their respective holders.
About Apparatus, Inc.
Apparatus designs, delivers, and continuously refines the most durable IT solutions in the world, making clients more productive, more profitable and more prepared to evolve as technology does. Clear client focus, a potent business model and formidable technical proficiency have propelled Apparatus growth as a top tier managed services provider. Apparatus ranks 23rd of 501 global managed services providers (according to 2014 MSPMentor rankings) and is consistently recognized on the Inc. 5000 list of fastest-growing private companies. Visit www.apparatus.net to learn more.
Source: Virtusa Corp.