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Intelligroup sells APAC subsidiaries
By siliconindia
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Friday, 04 April 2003, 20:30 IST
EDISON: Intelligroup Inc. (Nasdaq:ITIG), a provider of IT outsourcing services, Friday announced the sale of its Asia-Pacific group of subsidiary companies, operating in Australia, New Zealand, Singapore, Hong Kong, and Indonesia, to the Singapore based Soltius Global Solutions PTE Ltd.
Soltius is part of SDI Technologies Group which has operations in Asia-Pacific, Europe and the United States. Soltius is Intelligroup's business partner for provision of services in Indonesia. Intelligroup will become a minority shareholder in Soltius, owning 5% of the voting capital stock, the company claimed in a press release.
However, Soltius Global Solutions will only be a branded partner and will continue to operate the acquired business units under the "Intelligroup" brand for a period of two years, the company announced. Soltius expects minimal impact to existing Intelligroup staff, including senior management of the business units, resulting in no significant impact to customer relations.
Under the terms of the agreement, Intelligroup will contribute its ownership of the individual subsidiary entities to Soltius, and assign to Soltius approximately $4.7 million in intercompany receivables from these subsidiaries. In addition to the allocated 5% stock ownership in Soltius, Intelligroup will receive approximately $650,000 in cash over a period of 12 months. Further, Soltius will have the rights to Intelligroup's tools, methodologies, templates and offshore support services.
The Asia-Pacific group of subsidiaries being sold generated $7.0 million in revenue for the Company in fiscal 2002, with operating costs totaling $7.9 million. Intelligroup says it anticipates the sale of such subsidiaries will result in a non-cash charge against income of approximately $1.7 million being recorded by the company during fiscal 2003.
Commenting on the sale, Arjun Valluri, Intelligroup's President and CEO stated. "By transferring operating control in these markets where we had a smaller percentage of business, Intelligroup can focus its efforts on its significant presence in the United States, India and Europe, while continuing to service customers in the Asia-Pacific market through this trusted and reliable partner."
Valluri adds, "Customers will continue to receive the highest levels of service. Current and future customers can benefit from both Intelligroup's and Soltius's expertise in enterprise applications and offshore outsourcing."
Commenting on the acquisition, Harmeet Bindra, Chief Executive, Soltius, said, "Asia Pacific has always been a key market for us. This acquisition will further expand our companies' position in the industry and offer superior customer service with broader geographical coverage. The existing and future customers will enjoy the advantage of having a strong and focused player in the region along with the value-added services that Soltius can offer. We see this acquisition as a strategic investment and believe that it will bring continued benefits to all of our customers, employees and Investors".