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

Feb 15 2013, 19:06 IST
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The combined company, which is expected to get a brand overhaul soon, is the fifth-largest software services provider in India.  (Reuters) The combined company, which is expected to get a brand overhaul soon, is the fifth-largest software services provider in India. (Reuters)
SummaryComplex IT's turnover last year stood at $50 million and it has 500 employees.

Mahindra Satyam today said it has acquired a 51 per cent controlling stake in Brazilian SAP consulting firm Complex IT, with an upfront payment of USD 6.5 million in cash and total payout of nearly USD 23 million, in a deal likely to be closed by next month.

"Mahindra Satyam will make an upfront payment of USD 6.5 million in cash, and the total payout may go up to USD 23 million, based on Complex's earnings over the next 18 months," Manoj Bhat, Tech Mahindra Senior Vice-President and Head of Corporate Planning and Mergers & Acquisitions, told reporters on the sidelines of the ongoing Nasscom summit here.

Mahindra Satyam is a subsidiary of Tech Mahindra. Both the companies will work as one entity in Brazil, he said.

The acquisition will focus on developing solutions for the rapidly-expanding enterprise solutions market in the South American country, he said.

Mahindra Satyam and Complex will be going to market with proprietary solutions for large manufacturing, financial and consumer services companies, Bhat added.

"The way we have structured the deal is that we will pay around six times the Ebitda (earnings before interest tax depreciation and amortisation) valuation of Complex."

Bhat said the Mahindra Group company will take a stock of the deal after 18 months and assess the progress, based on which the further payment will be made. "The maximum payout that can be USD 23 million for a 51 per cent stake."

Brazil is the second-fastest growing geography globally for SAP. Software revenues for SAP grew 20 per cent last year.

Revenue from SAP stands at USD 1 billion.

The current spend on IT by firms in Brazil is around USD 70 billion with USD 36 billion being spent on services and software. Of this, SAP revenue stands at USD 1 billion.

"Our portion in revenue is 5 per cent of this. We want to double it and it will take 5-6 years to achieve the target if the company grows at 30 per cent, which is our target. This joint venture, therefore, will help us grow faster," Complex Chairman and CEO Antonio Rossi said.

"The relationship with Mahindra Satyam will mean enhanced career opportunities for our team, and increased quality of services to our customers and partners," Rossi added.

Complex IT had a turnover of USD 50 million last year with 500 employees.

"This combination of Complex and Mahindra Satyam strengthens our commitment to the Brazilian market, which is one of the fastest

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