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Mahindra Satyam buys 51% stake in Brazil?s Complex IT

Mahindra Satyam on Friday announced the acquisition of Complex IT, a Brazil-based SAP consulting provider.

Mahindra Satyam on Friday announced the acquisition of Complex IT, a Brazil-based SAP consulting provider. The all-cash deal involves an upfront payment of $6.5 million for a 51% stake. The software-services provider has said that the payout may go up to $23 million based on Complex IT?s Ebidta and revenue performance in the next 18 months.?

The Sao Paulo-headquartered firm, which has about 500 employees, focuses on SAP as a primary service in the enterprise resource planning (ERP) market. The SAP market in Brazil is pegged at about $1 billion, of which Complex IT holds 5% of the market.? The current revenue run rate of the company is estimated at $45-50 million. At present, the company has about 120 active clients.

?Having a partner in the region makes a lot of sense than trying to do things organically. The market dynamics are different in Latin America than what we see in Europe and the US. It made sense for us to have a partner who speaks the local language and is familiar with taxation issues,? said Arvind Malhotra, senior VP, strategic accounts, Mahindra Satyam, adding that with IT services growing rapidly in emerging markets like Brazil and Latin America the acquisition was apt.

Mahindra Stayam said it also has an option to increase its stake to 100% in the Brazilian firm after the company achieves the milestone in the next 18 months. Brazil is the second-fastest growing geography globally for SAP. Software revenue for SAP grew 20% in the last year. The current spend on IT by companies in the region is estimated at $70 billion, while $36 being spent on services and software

?With the Olympics in 2016 and FIFA next year, we believe it is the right time to be in Brazil,? said Malhotra. Tech Mahindra and Mahindra Satyam operate as one entity in Brazil and have an employee base of 125 people.

The company pointed out that the deal is expected to close by end of March and after the merger, existing management will be retained with Luiz R Martins of Complex IT as the chairman of the company and Antonio Rossi as the CEO. Andre Santos, the CFO of the firm will be from Mahindra Satyam.

Experts point out that the recent acquisitions of the IT majors like Cognizant and Infosys show the level of importance being placed by them on the SAP services market, which is of a significantly large size. Recently in December, New Jersey-based Cognizant acquired six companies of German IT consulting and services firm C1 Group, which provide services in enterprise application mainly SAP and high-end testing.

During the October-December period, Mahindra Satyam?s net profit declined by 74% to R79.98 crore due to one-time charge for settling Aberdeen claim.

During the quarter, Mahindra Satyam paid R294 crore towards settlement of legal claims of Aberdeen.

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First published on: 16-02-2013 at 02:18 IST
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