Mastek buys STG International for $29 million
11 Mar 2008
Mumbai-based IT solutions provider Mastek Ltd has acquired US-based, Systems Task Group (STG) International Ltd in an all-cash deal worth Rs116 crore ($29 million). STG provides IT solutions to the North American property and casualty (P&C) insurance industry.
The acquisition will be funded through internal accruals and bank borrowings.
Mastek carried out the acquisition through its wholly owned US subsidiary, MajescoMastek and expects to strengthen its presence in the non-life insurance segment and expand the opportunity pipeline in the overall insurance market.
After the acquisition Mastek will hold 100 per cent equity stake in STG. Initially Mastek will pay 85 per cent of the total consideration for the acquisition, while the rest will be linked to ongoing performance and paid by the way of earn-outs.
The property and casualty segment is a lucrative market, with insurers in this category expected to spend over $20 billion by 2010 on IT, up from $16 billion in 2007.
Post-acquisition, STG will be known as STGMastek.
STG has about 350 employees and a customer-base, which includes more than 35 small and mid-sized American insurance carriers, Mastek reported.
STG is the second such buyout for Mastek after Vector Insurance Services was acquired in July 2007 (See: Mastek acquires US-based Vector Insurance Services). STG, headquartered in New York, has a fully integrated offshore competency centre in Mumbai (India).