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COVANSYS ANNOUNCES AGREEMENT TO SELL ITS STATE AND LOCAL
GOVERNMENT PRACTICE TO SABER
Transaction
Will Enable Covansys to Focus on Higher-Growth, Higher-Margin
Global Outsourcing Business
FARMINGTON HILLS, Mich. (March
8, 2006) /PRNewswire-FirstCall/ – Covansys
Corporation (Nasdaq: CVNS), a global consulting and technology
services company, today announced that it has reached a definitive
agreement with Saber Consulting, Inc., a privately-held, leading
provider of software and services to state and local governments,
to sell its state and local government practice for up to $40 million
in cash. Saber Consulting is a portfolio company of Accel-KKR,
a leading technology-focused private equity firm. PDA Software
Services (PDA), a company Covansys acquired in 2002, is not part
of this transaction. The state and local government practice had
revenue and income from operations of $75.7 million and $2.8 million,
respectively, for the year ended December 31, 2005.
Covansys' state and local government practice is a leader in helping
state and local governments meet both their enterprise and domain-specific
IT needs in order to realize cost savings and improve business
process quality and productivity. It currently provides technology
solutions and services to dozens of states and local governments
and employs approximately 350 individuals.
Raj Vattikuti, Covansys' President and
Chief Executive Officer, said, "We are pleased to announce
this transaction because it will allow Covansys to more fully
focus on its global outsourcing
business. This is clearly the right transaction for us and we look
forward to delivering improved results and creating additional
value for our shareholders following the successful completion
of the sale. We believe Accel-KKR and Saber are ideally suited
to take the state and local government practice to the next level."
Ben Bisconti and Rob Palumbo, Managing
Directors of Accel-KKR, said, "This transaction is an excellent
example of how a focused private equity firm can work with a
successful public company to
achieve corporate strategic objectives while continuing to serve
the best interests of customers and employees, and without interruptions
to the technology innovation process. We believe this is an exciting
event in the public sector software and services space, and we
are confident that the combination of Covansys' state and local
government practice and Saber will provide tremendous growth opportunities
and reinforced industry and market leadership to the merged company
going forward, as well as enhanced services and offerings to customers
across the country."
Arvind Malhotra, Senior Vice President
of Covansys' state and local practice said, "The entire
state and local practice management team and I are excited about
this transaction and its
many benefits for our customers and employees. As a private company,
we will be able to focus on long-term growth and enhancing service
for our customers. Accel-KKR has tremendous resources and expertise,
and we look forward to joining forces with Accel-KKR and Saber
as we move forward."
Under the terms of the agreement, Saber Consulting will acquire
the assets of the state and local government business. The agreement
does not include Covansys' business process outsourcing (BPO) business
or any of the assets or contracts that Covansys acquired with its
acquisition of PDA Software Services in 2002.
The closing of the transaction is contingent on the Company's
ability to meet certain closing conditions.
About Saber
Saber, founded in 1997, is headquartered in Salem, OR, with offices
in Sacramento, CA, Annapolis, MD, Mequon, WI. The privately held
company has deep customer relationships with state and local government
entities across the country, providing software and services that
underpin essential functions such as voter registration, election
management and forms and document processing. For more information,
please visit www.saberconsulting.com.
About Accel-KKR
Accel-KKR is a technology-focused private equity firm that invests
primarily in technology businesses with $15 million to $150 million
in revenue that are well positioned for top-line and bottom-line
growth. At the core of Accel-KKR's investment strategy is a commitment
to developing strong partnerships with the management teams of
its portfolio companies and a focus on building value through the
contribution of unique financial, strategic, technical, and operational
resources. Accel-KKR has a particular focus on the following transactions:
Recapitalizations of family-owned or closely-held private companies,
divisional buyouts of larger companies, and going-private transactions.
For more information, please visit www.accel-kkr.com.
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 global delivery capability to achieve rapid deployment,
world-class quality and reduced costs. Covansys is known for strategic
outsourcing and technology solutions in the healthcare, financial
services, retail and distribution, manufacturing, telecommunications
and high-tech industries. Founded in 1985, with 7,000 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(R). All three
are ISO 9001:2000 certified and assessed at Level 5 in PCMM(R),
and five global facilities are BS7799-2:2002 certified.
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
in this press release 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 impact of changes in estimates on fixed price projects,
internal control weaknesses, variability of operating results,
failure to recruit, train and retain skilled IT professionals,
the failure of our agreement to sell the state and local practice
of our Public Sector business to close, 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, public sector budget constraints,
limited protection of intellectual property rights, infringement
by our services on the property rights of others, legal liability
and damage to our professional reputation from claims made against
our work, and risks related to merger, acquisition and strategic
investment strategy.
Contacts
For Accel-KKR
Joseph Kuo / Andrea Calise
Kekst and Company
212-521-4800
For Saber
Bob Patterson
MKTX, Inc.
503-646-6589
bobp@mktx.com
For Covansys Corporation:
Investors:
James S. Trouba
(248) 848-2267
jtrouba@covansys.com
Media:
Michelle Jones,
(248) 848-2269
email: mjones@covansys.com
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