Sonata takes majority stake in TUI for Rs 106cr

Bangalore-based software services firm Sonata Software has acquired 50.1% stake in TUI Infotech, a German software firm, for Rs 106 crore in an all cash deal. TUI Infotech has been part of the $25 billion TUI Group, a travel and shipping conglomerate headquartered in Germany.

This is an yet another example of how captive IT centres of conglomerates are divesting their holdings to third party service providers in an effort to rationalise costs. Recently Unilever sold the majority stake in its bangalore based BPO subsidiary to CapGemini. Earlier GE divested its BPO operations in India to waht is now called Genpact. 

B Ramaswamy, president & MD of Sonata Software, said: "This innovative partnership combines the strengths of the two companies - Sonata's 1,700 people India development facility and TUI Infotech's 400 plus onshore German IT professionals. This provides a compelling value proposition for European customers looking at a low-risk, cost-effective outsourcing option."

Sonata will be using around Rs 40 crore from its cash and cash equivalent reserves of Rs 60 crore, while the remaining will be raised through debt. TUI Infotech has revenues of $140 million with net margin of $15 million, employs 400 people and has cash reserves of around $10 million.

TUI Infotech basically caters to its group companies and according to TUI officials, on an average the TUI Group spends around $350 million annually on IT. TUI Infotech has had a three-year outsourcing relationship with Sonata and also works with IBM, Wipro and WNS, beside other vendors for a host of IT and BPO requirements.

Sonata with this acquisition will not only get a larger volume of business from the TUI Group, an existing key customer, but will also use the acquisition to enter the German market which ahs a high potential.

TUI Infotech has built up capabilities in remote infrastructure management and acquired domain knowledge in verticals like travel, tourism, airlines and hospitality, as well as expertise in horizontals like enterprise applications, web applications, business intelligence and legacy applications management.