Mumbai, Nov. 5: US-based Virtusa Corporation will acquire a majority stake in Chennai-based Polaris Consulting & Services for Rs 1,172.80 crore.

The $479-million Virtusa will also come out with an open offer to acquire an additional 26 per cent from the minority shareholders of Polaris, for which it has earmarked Rs 588 crore.

A subsidiary of Nasdaq-listed Virtusa will acquire 53 per cent of Polaris from certain promoter entities led by Arun Jain and other shareholders, which include Orbitech Pvt Ltd (part of The Rohatyn Group).

Virtusa will buy the shares for Rs 220.73 apiece, aggregating to nearly Rs 1,173 crore.

While the announcement came after market hours, the acquisition price is at a premium of nearly 8 per cent to the closing price of the Polaris scrip on the bourses today.

The deal is expected to close in the fourth quarter ending March.

Virtusa will finance the transaction through a combination of cash on its balance sheet and debt.

The company said it has arranged debt funding of $300 million from JP Morgan Chase Bank, N.A. and Bank of America, N.A.

Polaris said upon closing of the transaction, Citigroup Technology Group Inc (Citi) has agreed to designate Virtusa and Polaris as a preferred vendor for global technology resource strategy for the provision of IT services to Citi on an enterprise-wide basis.

Citi is one of the largest clients of Polaris.

As of September 30, Polaris had around 7,650 employees serving clients through 12 development centres.

The combination of Virtusa and Polaris is expected to create a global provider of IT services and solutions to the banking and financial services industry.

The combination will provide an end-to-end portfolio of differentiated solutions to banking and financial services entities, improve the combined entity's competitive position and expand the addressable market.

Virtusa said it expected to realise over $100 million of cumulative revenue synergies in the next three fiscals.

While Polaris (earlier known as Polaris Software Labs and later as Polaris Financial Technologies) has been considered an acquisition target for quite some time now, it remains to be seen if the development leads to more such instances in the mid-tier IT services space.

Apart from combining Virtusa's expertise in consumer and retail banking with Polaris' strength in corporate and investment banking,