Ybrant Digital, an Online marketing company, and LGS Global, a BSE listed technology and outsourcing services provider have proposed a merger, with a share exchange ratio of six equity shares of LGS for each equity share of Ybrant, of face value of Rs. 10 each. At the time of filing this report, LGS shares are priced at Rs 53.15, up 3.61% (Rs 1.85); the company has a market cap of Rs 134 crore, and a free float (public shareholding) worth Rs 60 crore.
The post merger, current Ybrant CEO Suresh Reddy will be CEO and Chairman of the merged entity, and LGD Managing Director Subba Rao Karusula as the Business Head of the LGS Division of Ybrant. The proposed merged entity will be named Ybrant Digital Limited. The merger is subject to regulatory approvals from Indian stock exchanges and the high court of Andhra Pradesh.
Given that the company has raised a substantial amount of funding –$48 million earlier this year, and claims that it has raised $100 million in total, Rs 134 crore appears to be affordable. Ybrant’s shareholders include premium institutional investors like Oak Investment Partners, GE Asia Pacific Capital among others. Following the acquisition, Ybrant claims, the combined entity will have operations in more than 20 countries with over 1200 employees.
Our Take: Does The Merger Make Sense?
LGS provides Enterprise Resource Planning, Customer Relationship Management, Application Services, (including mobile applications), Testing Services, Enterprise Application Integration, E-commerce, Infrastructure Management Services, e-Learning, Identification Solutions and Strategic Transformational Services.
Ybrant, on the other hand, at the core, is a sales house: it has acquired ad networks (a list of Ybrant’s acquisitions here) to sell their inventory, and also acquired (Lycos) and launched properties. At the time of the Lycos acquisition, Ybrant CEO Suresh Reddy had told MediaNama:
We bring in competency for sales, while they (Lycos) bring competency on the content side. We specialize in selling international traffic for advertisers. Lycos has 60 million users, of which 15 million are from the US, and there’s a big (International) chunk that is under-monetized. The US accounts for most of their revenues. We have sales offices in about 20 countries, with agency relationships, running ads from 140 countries across the world.
Remember that Ybrant acquired recently acquired a minority stake in Israel’s Web 3.0, to add application development capabilities. By merging with LGS, the company might just acquire a host of outsourcing services it can sell internationally. In a statement, Ybrant says that the deal “Creates a global digital marketing powerhouse, with the state of art technologies back end using Cloud Computing and Mobile Apps.”
– Ybrant To Acquire Minority Stake In Israel Based Web 3.0
– Ybrant Raises $48 Million; Acquisition & Expansion Plans
– Why Ybrant Bought Lycos; Plans
– Updated: Lycos Sold To India’s Ybrant Digital For $36 Million
– Ybrant Digital Launches City Search Portal YReach; Our Review
– How Ybrant Funds Its Acquisitions
– Ybrant Acquires Ad Network Dream Ad