Virtusa Corporation has acquired all the outstanding shares of Apparatus, a provider of end-to-end IT infrastructure services headquartered in Indianapolis, Indiana.
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With over 200 employees, Apparatus provides consulting, service design, and delivery of infrastructure management services, helping its clients improve the operational efficiencies of their IT investments.
The acquisition strengthens Virtusa's growing Infrastructure Management Services (IMS) practice with the addition of Apparatus' Kore Managed IT Solutions platform. Virtusa will deliver remote infrastructure management (RIM) services from Apparatus' RIM center.
The combined entity will offer clients a stronger set of offerings that are sharply focused on simplifying their IT infrastructure and driving high levels of efficiency in IT operations.
Apparatus delivers its Kore Managed IT Solutions through a technology platform supported by optimized processes and solution frameworks that allow Apparatus to proactively and cost-effectively manage IT infrastructure for its clients.
The Kore platform includes cloud/virtualized infrastructure management; unified communication platforms; collaboration and content management; data management, backup and disaster recovery; and mobile device management.
Under the terms of the stock purchase agreement, Virtusa acquired all the outstanding shares of Apparatus for approximately $34.2 million in cash, as well as up to approximately $3.2 million in earn-out and contingent consideration based upon Apparatus' full achievement of certain revenue and profit milestones for the fiscal year ending March 31, 2016.
Virtusa has also agreed to issue an aggregate of up to $3.5 million in restricted stock awards from Virtusa's stock option and incentive plan, not to exceed 93,333 shares, to certain Apparatus employees. The restricted stock awards will vest annually over a four year period.
For the fiscal fourth quarter ended March 31, 2015, Virtusa currently expects to incur approximately $200,000 of transaction expenses related to the acquisition of Apparatus.
For the fiscal year ending March 31, 2016, Virtusa management currently expects Apparatus to contribute revenue, including related synergy revenue, of approximately $34 million and to be approximately ($0.06) dilutive to Virtusa's earnings per share on a U.S. GAAP basis.
This is inclusive of approximately $600,000 of transaction expenses, as well as approximately $5 million of acquisition-related amortization of intangible assets, earn-out and contingent consideration, and stock based compensation. Virtusa management currently expects the Apparatus acquisition to be accretive to U.S. GAAP earnings per share for fiscal year 2017. ■