Mphasis has acquired 100% stake in Digital Risk LLC, a US-based company, for a total consideration of USD 202 million. Digital Risk LLC is a risk analytics company specializing in the fields of risk, compliance and transaction management in North America.
The acquisition is an all cash deal, with Mphasis having to pay USD 175 million upfront while the remaining amount is to be paid out of the earnouts over the next 30 months. The deal is expected to close by Jan. 31, 2013.
Mphasis will hold 100% stake in Digital Risk LLC. The promoters and founders of the acquired entity will continue to remain at the operating helm of the company for a minimum period of three years.
''We have been regularly emphasizing on the fact that good performance in the direct channel was almost mandatory for the company to gain momentum in its financial performance. This acquisition is a sizable step towards that direction. However, it is important to consider that the company has been under performing compared to its peers in terms of revenues growth since the past eight quarters,'' said Asit C. Metha.
''Going ahead, we do not expect a hockey stick kind of recovery in growth rates as HP would still contribute 50% to the total revenues and remain a major overhang. The company is expected to report its October quarter and 2012 year end numbers on Wednesday, Dec. 05, 2012. Hence, it would be wise to read this acquisition further in conjunction with the revenue performance in the October ending quarter. Until then, we keep our recommendation for Mphasis under review, although the overall initiative is a definite positive for the company,'' it added.
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