Geometric surges on acquisition of 3Cap Technologies
Geometric shares surged over 5 percent in morning trade after the engineering services and technology solutions provider late on Wednesday announced that its subsidiary, Geometric Europe, has acquired Germany-based 3Cap Technologies GmbH, a specialist in electronics engineering, primarily for the automobile industry.
January 03, 2013 / 13:26 IST
Moneycontrol Bureau
Geometric shares surged over 5 percent in morning trade after the engineering services and technology solutions provider late on Wednesday announced that its subsidiary, Geometric Europe, has acquired Germany-based 3Cap Technologies GmbH, a specialist in electronics engineering, primarily for the automobile industry. 3Cap is valued at 11 million euro and Geometric will pay 7.5 million euro up front. The remaining payment will be subject to earn-out under mutually agreed terms and conditions over a period of 3 years, it said."Geometric has strength in engineering software and mechanical engineering services, with almost 70 percent of its revenue coming from the US market...In taking this action, we address two main needs of our customers - the ability to deliver embedded systems based solutions and a stronger presence in Europe," said Manu Parpia, Geometric's MD, CEO.3Cap was founded by Henri Sadoune in 2004 in Germany. He has entered into a long-term agreement with Geometric and will take responsibility for all embedded systems activities, including Geometric's existing embedded systems projects, the company said. At 9:30 hrs Geometric shares were up 4.2 percent at Rs 104.85 on NSE. _PAGEBREAK_Below is an edited transcript of Manu Parpia's interview on CNBC-TV18Q: With regards to 3Cap Technologies GmbH acquisition, how much have you paid and what kind of financial profile does the company hold in revenues and profits?A: It is about 11 million euro in terms of revenues. The upfront payment is only 7.5 million euro and the balance is to be paid in the span of three years so the bulk of the payment would happen within two years. Q: What kind of profitability profile or margin profile does this company have?A: We have not talked about the margin profile but earnings before interest, taxes, depreciation and amortization (EBITDA) is close to 10 percent.Q: Why did 3Cap Technologies make sense for you. Where does it fit?A: As an engineering company we are strong in engineering software. We have build capability in engineering services in the mechanical sector. Today, much of every product contains electronics; a car by value contains 35-40 percent electronics. So, it makes sense to build our capability in electronics.Q: You are funding this through internal accruals, is there no requirement to either raise capital or debt for this buy?A: Absolutely, it is through internal accruals. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
