Hyderabad-headquartered Four Soft Ltd, a software solutions provider for transportation and logistics industry, has entered into an agreement to sell its core business to UK-based Kewill Group for $43.4 million (Rs 265 crore) including some overseas arms. The deal is subject to requisite approvals and is expected to be closed within the next 90 days.
The divestment includes the sale of its software solutions business valued at $22.5 million and the shares of related subsidiaries for $20.9 million.
Four Soft promoter Palem Srikanth Reddy will be paid an additional $1.7 million as part of the deal, which includes 5-year non-compete undertaking in addition to providing services as an independent contractor to ensure the transition of the business, as per a Press statement.
This may come under regulatory scanner as such non-compete fees to the promoters in asset sales have come under review in the past.
“It (the transaction) creates the world’s first $100 million-plus transportation and logistics solutions company,” said Reddy.
Four Soft intends to utilise the money for building business in areas such as media and entertainment, Big Data analytics, ADM and QA.
BMR Advisors acted as the financial advisor and BMR Legal acted as the legal advisor to Four Soft on this transaction.
“The acquisition of Four Soft is part of our strategic plan to significantly grow the Kewill business over the next five years. At the completion of this acquisition, Kewill will have enhanced products, technology and domain skills, which will significantly improve our market-leading position,” said Bob Farrell, CEO and president at Kewill.
Established in 1972, Kewill is a leading provider of software solutions and caters to over 7,000 customers around the world including Bayer, Black & Decker, DHL, Hankyu Hanshin, Hitachi, Ingersoll Rand, Mothercare, UPS, Scott’s & Co and TNT. It is backed by Francisco Partners.
Headquartered in Hyderabad, Four Soft is promoted by politician-cum-businessman Reddy. The firm offers solutions in the areas of freight forwarding industry, customs brokerage, contract logistics, shipper logistics and services.
The firm is backed by Kotak PE, which invested Rs 25 crore back in 2005. The value of its investment is currently pegged at Rs 7.5 crore.
Four Soft scrip closed at Rs 19 a share, up 4.97 per cent on the BSE in a strong Mumbai market on Monday. The firm is currently valued at Rs 74 crore or around a quarter of the money it would get for selling its business.
(Edited by Sanghamitra Mandal)