Software services company, Mastek said its 100 per cent subsidiary Majesco which is into core insurance systems and services entered into a definitive merger agreement with U.S.-based Cover-All Technologies Inc. in a 100 per cent stock-for-stock transaction.
A statement by Mastek said that on closing of the transaction, Cover-All’s shareholders will receive 16.5 per cent of the outstanding shares of common stock of the combined entity, ‘Majesco’ on a fully diluted basis. The transaction is expected to close in the second quarter 2015 and both companies will continue to operate as separate entities until then. The closing conditions for the merger include Majesco’s listing of the New York Stock Exchange (NYSE), regulatory approval and Cover-All Stockholder approval.
Following the announcement, Mastek stock rose 19.99 per cent and closed at the day’s high of Rs. 324.8 on the Bombay Stock Exchange.
The company said the decision to merge the two businesses “is the latest step in the execution of Majesco’s aggressive growth strategy to consolidate its global insurance business under a single and separate entity”.
Last week, Majesco had announced the signing of a definitive agreement to acquire the insurance business of Agile Technologies LLC which is expected to bring additional IT consulting, data strategy and implementation expertise to Majesco.
The combined entity is expected to have over $ 100 million in annual revenue and high growth potential. Mastek said the entity is expected to have over 150 insurance customers in all tiers worldwide served by a global delivery team.
“We maintain a laser sharp focus on meeting the needs of just one industry — insurance, and we are making investments that add capability and capacity to serve our customers in meeting their growth objectives,” Ketan Mehta, CEO & founder, Majesco, who will serve as president and CEO of the combined entity said.
“The global insurance industry is in the midst of a once-in-a-generation technology transformation and Majesco has been a leading provider of the enabling software and IT services,” the statement said, adding, “the merger with Cover-All broadens Majesco’s capability and reach in servicing current and future customers”.
