MUMBAI (Reuters) - Indian software provider Four Soft Ltd said on Monday that it had bought UK-based DCS Group Plc's logistics unit for 850 million rupees in cash, and was looking for more acquisitions to expand into newer markets.
"The deal would make us the world's largest logistics software provider," Palem Srikanth, chief executive officer of Four Soft, told a news conference.
The acquisition, made through a Netherlands-based subsidiary, would double Four Soft's presence to eight countries and swell its customers to more than 250 from 120 now, he said.
"They (DCS) have a large customer base and the buyout will make companies like Germany's Kuenhe & Nagel and DHL our customers," Srikanth said.
Shares in Four Soft, which had jumped 44 percent in the past month on the acquisition talk, fell 10.5 percent to 92.85 rupees after the announcement.
"This is a classic case of buy on rumour and sell on news," said a local fund manager. "Since the company had said it plans growth through acquisition, the move was broadly expected."
The combined revenue of Four Soft and DCS's logistics division is estimated at US$28 million for the current year, above top ranked US-based TMW that has annual revenues of about US$25 million, Srikanth said.
Globally, the logistics software industry's revenue is estimated to be about US$500 million.
Srikanth said the acquisition was funded from its cash reserves and loans from the UK branch of the ICICI Bank.
"We had cash of 300 million rupees and the rest came from ICICI as a loan of 7.2 million pounds (US$13.2 million)," he said.
The company is planning more acquisitions and has decided to raise about 250 million rupees through a private placement of shares, Srikanth said.
Kotak Mahindra group's private equity fund, India Growth Fund, would be subscribing to the offering, he said.
Four Soft buys DCS unit for US$19.5mln
By M.C. Govardhana on Sep 5, 2005 9:25AM
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