Embedded software solutions firm Global Edge Software Ltd Tuesday acquired Dearborn Electronics (India) Ltd for an undisclosed amount to foray into automotive electronics and industrial automation embedded systems.
"The acquisition will support our strategy to enter other vertical sectors and expand our portfolio in domestic and global markets," Global Edge chief executive M.P. Kumar told reporters here.
He, however, did not disclose the value of the all-cash deal, including premium and royalty being paid on Dearborn brand, citing legal constraints as the 100 percent acquisition was in the process of being concluded.
"We will disclose the acquisition cost at an appropriate time during the next couple of months as we are in the process of completing the legal formalities," Kumar clarified.
The city-based Global Edge offers embedded solutions and services in the telecom space spanning wireless, platform, multimedia and IP (internet protocol) networking, while Dearborn caters to original equipment manufacturers (OEMs) and tier-one suppliers, providing embedded solutions for diagnostic tools, ECU (engine control unit) software systems used in the automotive and industrial automation domains.
Post-acquisition, though Dearborn will be a wholly-owned subsidiary of Global Edge, it will remain a separate entity to retain its brand value among customers, worldwide.
More From This Section
"The acquisition cost is being met with our internal accruals as we are debt free and profitable since our inception in 2000," Kumar asserted.
Leading investment holding firm Global Technology Ventures Ltd is a strategic investor in Global Edge and will continue to stay invested.
With 100 embedded software engineers of Dearborn joining, Global Edge will have 600 employees, including its 500 engineers.
"We will hire about 250 engineers over the next three years and invest Rs.10-15 crore a year in expanding infrastructure and installing additional equipment," Kumar said.
Combined revenue of both the companies post-acquisition will be Rs.85 crore, including Rs.72 crore of Global Edge and net profit Rs.11 crore, with Rs.10 crore generated by Global Edge.
The company has projected Rs.200-crore revenue in the third year of operation (2015-16) as a combined entity with Rs.40 crore as net profit, with 20 percent year-on-year growth.
"Synergy with Global Edge provides sector expertise, embedded domain knowledge and quality processes for us. Our client base, which will grow, will also benefit from the next generation solutions of Global Edge," Dearborn managing director Srinivas Prasad said on the occasion.
Prasad will be on Dearborn board while its chief executive Anand Mutalik will continue in the same post.
"Partnership with Global Edge will add value to our clients as we will be able to offer wider solutions and services to them and new clients," Mutalik said.
iGate Global Solutions chief executive Phaneesh Murthy, management consultant and branding specialist Harish Bijoor and GTV partner Shankar Venkararaman are other members on the Global Edge board.