Megasoft Buys VisualSoft
The value of the all-stock deal is subject to final approval, but the company said in a statement that VisualSoft investors will likely receive five Megasoft shares for every eight VisualSoft shares, for a total purchase price of 1.72 billion Rupees (US$37.48 million). The acquisition is expected to be completed in four to six months.
VisualSoft provides software outsourcing services along with product development for mobile security and data management. Megasoft says the acquisition will also beef up its back-office support for customers in the Americas and Europe. Megasoft offers OSS products for advanced signaling, real-time rating, and service control through its Xius India Ltd. subsidiary.
GV Kumar, Megasoft's managing director and CEO, said the fact that VisualSoft has more than 250 employees with telecom expertise and established facilities in Hyderabad, India, was a "crucial clincher" for the deal. "The growing global telecom outsourcing to India and the fast expanding MVNO market meant that we needed to strengthen our operations," he said in a statement.
Megasoft has been shifting its focus from pure product licensing to offering a range of services including back-office and outsourcing support. During the quarter ended June 30, Megasoft boosted its telecom revenues by 78 percent, signing up several new customers including VOIP software company Sonetel and Xero Mobile , an MVNO upstart in the U.S. Over 90 percent of VisualSoft's revenues come from offshore and back-office business.
The combined company will target "large and strategic outsourcing deals in telecom, in the specialist domains of roaming, interoperability infrastructure, subscriber authentication, and OSS technologies," Kumar said.
In March, VisualSoft called off a proposed three-way merger with AppLabs Technologies Pvt. Ltd. and retail services provider eSolutions Pvt. Ltd., citing delays in getting regulatory approval.
Shares in Megasoft closed down 4.9 percent at 131.75 Rupees ($2.87) on the Bombay Stock Exchange, while VisualSoft's stock climbed 8.15 percent to 92.9 Rupees ($2.02).
Both Megasoft and VisualSoft are among the companies featured in Light Reading's Who Does What: Outsourcing to India report, which aims to identify and categorize the Indian telecom outsourcing companies being used by carriers, vendors, and developers worldwide.
— Nicole Willing, Reporter, Light Reading