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Covansys approves a long-term MSA, SPA with Fidelity

By SiliconIndia  |   Wednesday, 28 April 2004, 00:00 Hrs
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BANGALORE: Covansys Corporation (NASDAQ: CVNS), a leading global provider of strategic outsourcing and integration services, has announced that its Board of Directors has unanimously approved a long-term Master Services Agreement ("MSA") and a Stock Purchase Agreement ("SPA") with the Fidelity Information Services, Inc. subsidiary of Fidelity National Financial, Inc. ("FNF") (NYSE: FNF), one of the world's largest providers of information-based technology solutions and processing services to financial institutions and the real estate industry. The MSA will make Covansys the primary strategic provider of outsourced IT services to FNF.

The strategic alliance with FNF, which is expected to generate an anticipated $150 million in revenues over the next five years, combines Covansys' leading position in strategic outsourcing and integration services, including its high quality, cost-effective offshore service capabilities in India, with FNF's deep experience serving financial institutions and the real estate industry with information-based technology solutions and processing services.

Master Services Agreement

Covansys expects to realize a number of significant financial and strategic benefits as a result of its multi-year MSA with FNF including:

-- The generation of an income stream that is expected to increase Covansys' annual revenues by over five percent by 2005 and to be significantly accretive to the company's earnings per share on a fully diluted basis by 2005;

-- The opportunity to substantially strengthen and enhance Covansys' existing expertise in the Financial Services sector, which accounted for approximately 23 percent of the company's fourth quarter 2003 revenues;

-- The ability to add additional scale to the company's unparalleled client support capabilities in India, where Covansys employed as of December 31, 2003 more than 2,500 billable professionals at development centers in Chennai, Mumbai and Bangalore, two of which carry CMM(R) Level 5 quality ratings; and

-- The opportunity, given FNF's position as a leading-edge provider of mortgage and banking services, to develop innovative information technology outsourcing solutions for its clients that will establish the benchmark for best practices in the financial services sector.

"We are excited about entering into what we believe will be a highly successful and mutually rewarding relationship with FNF," said Covansys Founder and Co-Chairman of the Board Raj Vattikuti. "Our partnership firmly establishes Covansys' global reputation as both a leader and an influencer in the increasingly competitive and growing offshore outsourcing space. FNF's selection of Covansys as its primary provider in this area is testament to our capabilities in servicing the financial services vertical and to our fourteen-year track record of offshore success. This relationship will build on these achievements by immediately enhancing our ability to help leading financial services companies realize substantial productivity and efficiency gains through our innovative information technology solutions."

Martin C. Clague, President and Chief Executive Officer of Covansys, added, "This strategic partnership with FNF gives Covansys a unique opportunity to develop innovative, full-service solutions that integrate technology, services and processes for many of the biggest names in the financial services industry. As a result, we can significantly accelerate our penetration of this sector."

"This is an important strategic investment for FNF," said William P. Foley, II, Chairman and Chief Executive Officer of FNF. "Prior to this investment, FNF's global outsourcing activities consisted of project-based, contractual relationships with several offshore service providers. While the absolute cost savings in offshore outsourcing are compelling, we have been searching for a strategic partnership that not only optimizes our technology delivery efforts from a cost, quality and time-to market perspective, but also improves our competitive advantages in generating incremental revenue from our financial institution customer base. With this significant investment in Covansys and our representation on the Board of Directors, we have found an outstanding U.S. based IT services partner with well established operations in India that allows FNF to accomplish these objectives."

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