Tech Mahindra has bought US-based LightBridge Communications as a revenue enhancing exercise.
Indian IT and networking technology provider Tech Mahindra has acquired US-based network services provider Lightbridge Communications Corp (LCC) for $240 million in order to extend its parent company Mahindra Group’s revenue target of $5 billion for 2015. The deal value includes LCC’s outstanding debt of $85 million.
Considering this is the company’s largest overseas acquisition, this move is a step towards becoming a serious player in network services. Established in 1983, Tech Mahindra is the only Indian IT company in the network services space worth $40 billion, which is led by Alcatel-Lucent and Ericsson.
With an addition of 5,700 employees that will join the company from LCC, the total employee count at Tech Mahindra will reach one lakh. The company has inherited 20-30 customers to from LCC.
Projections for LCC’s revenue in 2014 are pegged at $430 million, with an operating margin of about eight percent. Tech Mahindra will fund the deal through internal cash flows, while expecting an outflow of about $200-220 million due to this deal.
LCC’s employees are spread across Europe, Latin America and Africa, with about 800 based in the US and a small presence in Southeast Asia. It currently does not have any development centers in India.
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