MphasiS is to acquire Fortify Infrastructure Services, a provider of offshore-based remote IT operations and management (ROM) services via an all-cash deal. MphasiS would be paying US$15.5m (upfront consideration) + earn-outs (over a period of two and a half years if certain financials are attained).
The acquisition should provide MphasiS access to Fortify’s accounts, an experienced management team (average experience of 20 years) and a platform to proffer ROM services. Through this acquisition, MphasiS would be able to increase its share from outcome-based services (currently, FPP stands at 13.4%, the lowest of the top-five Indian IT companies).
Fortify Infra Services was privately held, operating in India and the US. It had US$20m in revenue in FY09, gross margins of 22% and would be EPS accretive for MphasiS. It has 25+ active customers and 300+ employees. In Nov ’09, it had acquired UCA Services, Inc. (managed services provider, 80% repeat customers) and in Apr ’09 WAMS (end-to-end network service provider). Fortify has a wide range of ROM offerings, which include data center operations, systems and application infrastructure management, managed security services, network monitoring and management, and virtualization services.