MindTree Ltd has announced that it has signed a definitive agreement with the largest shareholder of Aztecsoft Ltd. to acquire 32.57% at Rs 80 per share, which values the company at an equity valuation of USD 90 million.

“If you see Aztecsoft is very focused on what you call the outsourced product development or the OPD market and on independent testing. It is also largely focused on the US geography. MindTree brings in a very large number of industries and practices in which we now work. We also do product development and work particularly in the R&D services business. So, together with the Aztecsoft offering, we now have the entire spectrum of the OPD offering for our customers,” said Ashok Soota, CMD, MindTree.  

MindTree said that the Aztecsoft acquisition will be funded by the company’s internal accruals. There will be no change in Aztecsoft and MindTree's FY09 guidance, it added. Aztecsoft and MindTree will be run as separate entities. MindTree sees potential of USD 100 million in the OPD business.

MindTree will also announce an open offer to Aztecsoft’s public shareholders to purchase up to an additional 20% equity ownership interest. These transactions are subject to customary regulatory filings, clearances and approvals. After the completion of these transactions, MindTree will initiate the process of merging Aztecsoft into itself.

Aztecsoft is a leader in the Outsourced Product Development (OPD) and Testing markets as a 2,100+ people strong software engineering services company. It provides full-lifecycle product engineering, independent testing, sustenance engineering and professional services to application and infrastructure software vendors, as well as to New Media and Internet-based companies. It has successfully completed over 1,600 product releases to date.

“This marks a momentous occasion for us all. Aztecsoft is truly aligned with MindTree’s values, culture and high standards of corporate governance. We believe this step will be beneficial for customers, people and shareholders of both the organizations,” said MindTree Chairman & Managing Director Ashok Soota.

The product stack of OPD encompasses embedded, platform/infrastructure, middleware, application, and SaaS/cloud-computing software segments. Through its R&D Services business, MindTree is well recognized in the hardware engineering, system platform and embedded software segments of the OPD market.

With the addition of Aztecsoft, MindTree will offer customers a complete end-to-end OPD product stack encompassing embedded, platform/infrastructure, middleware, application, and SaaS/cloud-computing software segments. Aztecsoft brings solid presence from platform all the way to the cloud computing segments. The combined entity will, thus, cover the entire product development stack. In addition, Aztecsoft also brings deep expertise in independent testing. Together, MindTree will have a 2,000+ Testing services team, making it one of the strongest in the market.

“Aztecsoft will complement MindTree’s expertise in both IT and R&D Services. For our IT Services customers, Aztecsoft’s software product knowledge will give us a unique edge in architecting, integrating, deploying and managing the right solutions,” said MindTree Chief Executive Officer Krishnakumar Natarajan. “Aztecsoft’s expertise in OPD and Testing markets, coupled with our R&D Services business, makes us a leader serving top global technology companies.”

Aztecsoft Chief Executive Officer Samir Bodas said, “We are delighted about the merger with MindTree, and are very excited about the road ahead. For over a decade, Aztecsoft has established itself as a differentiated leader in the OPD and Testing spaces. With MindTree, we will further extend this leadership, and be able to offer our customers newer services and solutions. Together, we will be positioned to become the best Product Engineering and Independent Testing Services Company in India.”