Virtusa to buy 53% in Polaris for Rs 1173cr

US-based Virtusa has entered into an agreement with midcap IT firm Polaris to buy 53 percent stake in it for a price of Rs 220.73 per share, in a deal worth Rs 1,173 crore.In addition, Virtusa will make an unconditional mandatory offer to the public shareholders of Polaris to purchase up to an additional 26 percent of the outstanding shares of Polaris.“I am delighted to have identified Kris Canekeratne and his team at Virtusa to pass on the baton to grow Polaris by offering greater value to customers and more opportunities for the team," Polaris chairman Arun Jain said in a statement. "I wish all Polaris associates who contributed to building Polaris into a world class company in the BFSI space, continued success in their journey under the larger canvas of Virtusa and Polaris."“Polaris brings a terrific team and an attractive, blue-chip client base to our organization. The combination of Virtusa and Polaris enables us to provide end-to-end global BFS services and solutions, expand our addressable market, and position us to pursue larger consulting and outsourcing opportunities," Virtusa CEO Canekeratne said.Upon closing of the transaction, Citigroup Technology, Inc, has agreed to designate Virtusa and Polaris as a preferred vendor for Global Technology Resource Strategy for the provision of IT services to Citi on an enterprise-wide basis.Citi has been closely associated with Polaris, a specialist IT firm focused on the banking, financial services and insurance (BFSI) sector, being a key client since the firm's inception.Analyst Prakash Diwan said Virtusa coming on board should help Polaris scale up its business and the deal will likely to a PE multiple rerating for the stock.Speaking to CNBC-TV18, Rahul Jain, VP of Systematix Shares & Stocks says the deal is not great in terms of realisation perspective. Price up-tick may be there and valuations may stretch over a time, he adds.