Caritor buyout of Keane to strengthen location edge
The combined entity will have a total global strength of about 14,000 employees once the acquisition comes through, reports Prerna K Mishra.Updated: Feb 08, 2007 19:02 IST
The merged entity formed by the acquisition of Boston-based technology services company Keane Inc by California-based Caritor Inc will have a combined strength of 6,000 employees operating out of India.
The combined entity will have a total global strength of about 14,000 employees once the acquisition comes through.
The two companies have strengths in different markets, giving them a complementarity. Keane will also gain an edge because Caritor has a higher share of lower-cost Indian workers.
Caritor announced its plans to acquire the New York-listed Keane for an all-cash purchase price of approximately $854 million on Wednesday.
The combined company, which Caritor will take private, will have anticipated annual revenues more than $1 billion. The combined company is expected to operate under the Keane name and maintain Keane's employee base in Boston. The US operations for the combined company
will be based in Boston.
Caritor's Chairman and CEO Mani Subramanian will become Chairman and
CEO of the combined entity.
Out of Keane's global strength of 10,000 employees, nearly 3,200 are based
in India while Caritor has 2,800 of its total global strength of 4,500 employees operating out of India. A higher share of Indian staff implies a better cost advantage based on offshore services.
"The combined entity gives size and scale to Keane that will obviously make
it look bigger and more capable to prospective clients. Also, the deal is a
perfect fit to fill in locational gaps in the portfolios of both companies
to make the global delivery model seamless," said Keane India Managing
Director Sukant Srivastava on the sidelines of the Nasscom 2007 industry conference in Mumbai on Thursday.
Caritor has a strong footprint in the US, France, the United Arab Emirates, Switzerland, Singapore, Australia and New Zealand while Keane is strong in the UK, Canada
Earlier, Keane India had chalked out a blueprint of ramping up to 10,000 employees in the next three years. With the Caritor deal, the deadlines seem to have got closer.
The $14.30 per-share price Keane stockholders will receive in the all-cash deal represents a 19 percent premium over Tuesday's closing price of Keane's stock.