Hexaware acquires US company for $34 million

IT and BPO services provider Hexaware Technologies has signed an agreement to acquire US-based testing services company FocusFrame for $34.3 million, a move that will position the domestic company as a high-end testing solutions provider.

The acquisition, expected to be closed within six weeks, will also help the Pune-based company increase its revenues to $100 million in three years.

According to the agreement, in the $34.3 million all-cash deal, Hexaware will pay $25 million on closure of the acquisition and the remaining part in two years. However, the payment of the balance amount will be contingent on meeting projected revenues and margin targets.

Hexaware Technologies executive chairman Atul Nishar said, "This acquisition completes the required set of testing competencies that will help us in increasing our market share, apart from accelerating growth. This will also add another 200 employees to our existing testing practice that has 400 personnel."

Besides, the buyout will help Hexaware enhance its global delivery capabilities, as FocusFrame has a considerable presence in Europe and the US. The company expected its revenues to leapfrog to $100 million from the present $12 million, he said.

FocusFrame will be merged with Hexaware, while the co-founders of the US company - Vaughn Paladin and Suri Chawla - will continue to run the operations. The California-based firm, specialising in automated testing of enterprise resource planning and custom applications, is expected to clock revenues of $24 million in this calendar year.

The US company has a patented 'Accelerator' technology that consists of pre-defined business process-testing components and functional libraries for SAP, Siebel and other platforms. Its business revolves around systems verification, quality strategy and IT governance solutions, and various functional, performance and system stress verification exercises.

It is also gold-level partner of German ERP major SAP and Mercury Interactive, a leading quality and BTO (business technology optimisation) vendor.