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COVANSYS INDIA LIMITED TO ACQUIRE
MAJORITY INTEREST IN FORTUNE INFOTECH LIMITED
Acquisition Expands Covansys’ Presence
in Business Process Outsourcing Market
FARMINGTON HILLS, Mich. (June 9, 2005) – Covansys
Corporation (NASDAQ: CVNS), a global consulting and technology
services company, today announced that its wholly owned subsidiary,
Covansys India Limited, intends to acquire up to 75 percent (up
to 4.05 million shares) of Fortune Infotech Limited’s common
stock for Rs. 32.50 per share ($0.74 per share). Covansys intends
to fund the acquisition with cash from its India operations. Fortune’s
current annual revenue is less than one percent of Covansys’ revenue.
The Company does not expect the acquisition to have a material
impact on its results of operation in 2005.
Like Covansys, which launched its offshore operations in 1992,
Fortune, with its principle office located in Baroda, India, is
an experienced provider of offshore outsourcing solutions. Fortune
focuses on business process outsourcing (BPO) and provides back
office services such as transaction processing, claim processing
and accounts payable processing services. The transaction enhances
Covansys' BPO capabilities and increases the company’s ability
to meet the needs of existing and prospective clients in the commercial
sector.
Raj Vattikuti, Covansys’ President and Chief Executive Officer,
said, “This transaction is an important next step in our
plan to capitalize on the significant opportunities in the BPO
market. Our acquisition of PDA Software Services in 2002 has provided
Covansys with valuable experience meeting clients’ BPO needs
and now, with Fortune, we are
well–positioned to enhance this service offering. This transaction
will augment our existing claims processing and invoice processing
expertise and enable Covansys to provide a full suite of BPO services
to our clients.”
Kantilal K. Patel, Chief Executive Officer and Managing Director
of Fortune Infotech Limited, said “With its financial strength
and global presence, Covansys is the ideal partner for Fortune.
This transaction facilitates both companies’ efforts to drive
growth in the rapidly developing BPO market and will help to expand
the services Fortune offers to clients. I am confident that Fortune
employees will enjoy greater opportunities and resources as a result
of our relationship with Covansys."
Krishnaswamy Subrahmaniam (K.S.), President and CEO of Covansys
India Limited, said, “With its complementary service offerings,
we will leverage Fortune’s capabilities to enhance existing
client relationships and establish Covansys as the preeminent provider
of BPO solutions. We look forward to a quick and seamless completion
of this transaction.”
Fortune has operations in Baroda and Bangalore, India as well
as a U.S. office in Princeton, NJ. Fortune Infotech Limited was
founded in 1998 and has approximately 560 employees.
Under the terms of the transaction, Fortune will be a majority-owned
subsidiary of Covansys India Limited. K.S. will oversee Fortune’s
operations following the close of the transaction.
The transaction is conditioned upon the satisfaction of customary
conditions and regulatory approvals in India. Covansys expects
the transaction to close in 2005.
About Covansys
Headquartered in Michigan, Covansys Corporation (Nasdaq: CVNS)
is a global consulting and technology services company specializing
in industry-specific solutions, strategic outsourcing and integration
services. Clients gain competitive advantage by leveraging our
unique on-site, offsite, offshore delivery capability to achieve
rapid deployment, world-class quality and reduced costs. A leader
in the public sector market, Covansys is also known for application
maintenance and development outsourcing in the healthcare, financial
services, retail and distribution, manufacturing, telecommunications
and high-tech industries. Founded in 1985, with 6000 consultants
and employees worldwide, Covansys was one of the first U.S.-based
IT services companies to establish offshore facilities in India,
and is a pioneer in seamlessly integrating offshore capabilities
into its offerings. Two of the company's three wholly owned development
centers in India are assessed at Level 5 in SEI CMM®. All three
are ISO 9001:2000 certified and assessed at Level 5 in PCMM®.
Covansys was named one of the leading IT companies for state and
local governments in 2002 and 2003 by Washington Technology magazine,
and one of the top 500 solution providers in 2002 and 2003 by VARBusiness
magazine. Visit our web site: www.covansys.com.
Safe Harbor Statement
With the exception of statements regarding historical matters
and statements concerning our current status, certain matters discussed
herein are forward-looking statements that involve substantial
risks and uncertainties. Such forward-looking statements may be
identified by the words "anticipate,'' "believe,'' "estimate,'' "expect''
or "intend'' and similar expressions. Our actual results,
performance or achievements could differ materially from these
forward-looking statements.
Factors that could cause or contribute to such material differences
include internal control weaknesses, impact of changes in estimates
on fixed price projects, variability of operating results, failure
to recruit, train and retain skilled IT professionals, exposure
to regulatory, political and general economic conditions in India
and Asia, short term nature and termination provisions of contracts,
competition in the IT services industry, economic conditions unique
to clients in specific industries, the success of the company to
negotiate contract renewals at comparable terms, decline in profitability
of European operations, public sector budget constraints, limited
protection of intellectual property rights, and risks related to
merger, acquisition and strategic investment strategy.
For More Information, Contact:
Investors:
James Trouba
(248) 848-2267
jtrouba@covansys.com
Media:
Michelle Jones
Covansys
(248) 848-2269
mjones@covansys.com
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