The Polaris - Orbitech Merger
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Case Details:
Case Code : FINC030
Case Length : 13 Pages
Period : 2002 - 2004
Pub. Date : 2004
Teaching Note : Available
Organization : Polaris Software Labs, Orbitech Solutions
Industry : Software, IT, Finance
Countries : USA, India
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FINC030) click on the button below, and select the case from the list of available cases:
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"The merger with OrbiTech is a more comfortable arrangement for we receive sixteen years of solid experience in designing exclusive software for the Banking, Financial Services and Insurance segment and the expertise of handling 10 million customers in seventy countries in one stroke. The merged entity is set to create a super mall for BFSI products." 1
- Arun Jain, CMD, Polaris Software Labs.
Introduction
On May 22, 2002, India-based Polaris Software Labs (Polaris)2 announced its merger with OrbiTech Solutions (OrbiTech), owned by the Citigroup3 in the US.
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This was one of the largest mergers in the software industry in the Asia-Pacific region; the combined valuation of the merged entity exceeded Rs.27 billion (bn). It was also one of the biggest acquisitions in terms of Intellectual Property Rights (IPRs).4 The merged entity would have 3,800 employees and combined revenues of over Rs.6 bn. The merger was expected to result in significant operational synergies, with significant cost savings through streamlining of infrastructure and rationalization of vendors. Analysts felt that the merger was beneficial for both Polaris and OrbiTech. Polaris gained by acquiring IPRs from OrbiTech, while OrbiTech gained the wide marketing network of Polaris.
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Prior to the merger, Citigroup was the only customer for OrbiTech products, as OrbiTech was not supposed to render services to other customers.
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After the merger was announced in May 2002, there were several rounds of negotiations between Polaris and Citigroup. The final agreement was signed in October 2002 under new terms and conditions.
The merged entity continued to be known as Polaris. Arun Jain (Jain), chairman & managing director and the CEO of Polaris, retained his designation while Ram Bhagwat, managing director of Orbitech became the president of the merged entity.
The merged entity had a 12-member board - seven directors from Polaris, three from Citigroup and two independent directors proposed by Jain. |
The Polaris - Orbitech Merger
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