PHOTO | Matt Volpini
Kris Canekeratne, chairman & CEO, Virtusa Corp.
September 10, 2020
Southborough's Virtusa to be acquired for $2B by Asian firm
Image | Courtesy of Google Maps
Virtusa's Southborough headquarters
By Sam Bonacci
Information-technology company Virtusa, based in Southborough, will be acquired by financial services firm Baring Private Equity Asia in an all-cash purchase of all outstanding shares of common stock valued at $2 billion, the companies announced on Thursday.
The price per share to be paid in the transaction, which was unanimously approved by the Virtusa board of directors, represents a premium of approximately 27% to the closing price of Virtusa common stock on Thursday, the last trading day prior to the transaction announcement.
“The benefits of this transaction extend to all Virtusa stakeholders, including our shareholders, who will receive immediate and substantial cash value, as well as to our team members, since BPEA has an exemplary track record of valuing innovative and talented global teams and supporting and empowering the businesses in which it invests,” Kris Canekeratne, chairman and CEO of Virtusa, said in a release.
Virtusa has struggled this year, with its stock losing nearly 60% of its value from Feb 20 to March 18. The stock had recovered partially since March, and following the announcement Thursday, the price jumped 24% to $50.37 per share on the Nasdaq.
For the first quarter of the year, the company reported a $193,000 loss in its net income while revenues were down 6%.
The process of selling the company began in July when Virtusa received an unsolicited offer. The company then pursued other potential buyers,ultimately signing non-disclosure agreements with five parties and engaging with two others, according to Virtusa. After an independent review of the alternatives available, it was determined the BPEA deal maximized value for shareholders.
In a letter to employees filed with the U.S. Securities and Exchange Commission, Canekeratne underscored that business would continue as usual until the merger officially closed, and announced plans about an upcoming town hall, where employees would be able to ask questions about the merger.
"BPEA has an exemplary track record of valuing innovative and talented global teams, as well as supporting and empowering the businesses in which it invests, and we expect our employees to have significant growth opportunities as part of BPEA," Virtusa wrote in an FAQ attached to the email. "This sentiment is consistent with the nature of our conversations with BPEA’s senior leadership over the last several weeks leading up to today’s announcement."
Founded in 1997, BPEA is one of the largest independent private equity firms in Asia with approximately $20 billion of assets under management. The firm has offices in China, India, Japan, Australian, Singapore and Los Angeles.
Virtusa was founded in Sri Lanka before moving to Southborough.
The transaction is expected to close in the first half of 2021.
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