Geometric acquires engineering services division of Modern Engineering

Geometric Software Solutions Company Ltd has announced that the Company & the globa1 engineering services division of Detroit based Modern Engineering on October 11, 2006 has announced that they have entered into a definitive merger agreement to form a global engineering solutions provider with an expansive services portfolio.

"The merger of Modern Engineering’s Engineering Division and Geometric represents a significant step in the realization of the true potential of global engineering", said Ravi Gopinath, MD & CEO of the Company. "Modern’s track record in engineering and manufacturing solutions coupled with Geometric’s presence in the development of cutting edge collaborative PLM solutions will offer our customers an unbeatable advantage in globalizing their engineering processes. We are excited to be the one of the few companies offering the global manufacturing sector this significant value proposition."

A Strategic Combination

The combination of the Company and Modern Engineering’s Engineering Services Division leapfrogs the combined entity to a premier position in a fast-changing engineering services & PLM market.

The merged entity is better positioned to meet the demand of customers with a broader range of services. The company's & Modern’s engineering services division combined will be ideally placed to tap the market opportunities and generate significant growth in revenues and earnings. The combined Company’s increased scale, scope and global capabilities will enhance its long-term value for shareholders, customers and employees alike. Approved by the boards of directors of both companies, the merger will build upon the complementary strengths of each company to create a unified global leader in the engineering industry.

"Modern and Geometric have a shared vision of providing customers a comprehensive suite of engineering services delivered globally" said Manu Parpia, Vice Chairman and Executive Director of the Company. "This merger will help us make the vision a reality, thus offering customers both savings and efficiencies in time to market."

Spanning the Globe

Through this strategic merging of two industry leaders, the combined company will emerge with a much larger operating base than either company maintained prior to the merger. Now, in addition to offices in India, Germany, France, Singapore, Japan, China, and Romania, they will also number eight offices in North America, showing a substantial global presence for the engineering industry.

"The merger provides us the mechanism to deliver a larger and more diverse set of services to our clients worldwide," said Michael McConnell, Senior Vice President of Global Engineering at Modern Engineering. "With the increased capacity and global footprint we will be uniquely positioned in the market to bring value to our clients both locally and on an enterprise level."

The transaction is valued at approximately $32 million, including a working capital loan of approximately $7 million. The net equity value of $25 million is funded by the Company's contribution of US$ 23.75 million representing 95% stake in the company & $1.25 million investment by Modern’s executive management for 5% stake. The Company's contribution is funded by approximately $10 million raised through preferential placement of equity with ICICI Venture, and balance through borrowings & internal accruals. The engineering services business of Modern Engineering has a current annual revenue of approximately $40 million.

Source : Equity Bulls

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