Mumbai, March 6: Tech Mahindra, the country's fifth largest IT services provider, today said that it will acquire CJS Solutions Group LLC, a US-based healthcare information technology consulting company, for an enterprise value of $110 million. CJS Solutions Group does business as The HCI Group.
Tech Mahindra said it would make an upfront payment of $89.5 million to buy the 84.7 per cent stake in the company. The balance 15.3 per cent will be acquired over a period of three years.
Based in Jacksonville, Florida, HCI Group works with some of the world's top healthcare providers, primarily in the US and the UK. HCI Group has a large pool of Epic and Cerner (healthcare software) certified professionals. It is present in Europe, West Asia and Asia Pacific and employs more than 500 professionals globally.
A statement from Tech Mahindra said the move was expected to strengthen its position in the healthcare provider space and give access to marquee customers and healthcare consultants.
The acquisition comes at a time investors have turned their attention towards the huge cash reserves of domestic IT service companies, resulting in demands for share buybacks.
Recently, Tata Consultancy Services announced a Rs 16,000-crore share buyback. There are expectations that other companies, including Infosys and Wipro, could follow suit in the coming weeks.
"Healthcare is one of the few sectors globally that is driving adoption of digital technologies. The acquisition will not only position Tech Mahindra as a significant player in the healthcare provider space, but will also provide an opportunity to go deeper into this space via electronic medical record implementation," C. P. Gurnani, MD & CEO of Tech Mahindra, said.
For the 12-month period ended September 2016, HCI Group had revenues of $114 million.
Tech Mahindra said the transaction was expected to close by April this year, subject to regulatory approvals.
On the BSE, the Tech Mahindra stock rose to an intra-day high of Rs 504.85 before closing at Rs 499.25, down 0.94 per cent.
In June last year, Tech Mahindra had announced it would buy US-based BIO Agency.
