Nearly five months after announcing that AppLabs Technologies, a privately-held software testing firm, and eSolutions, a software firm in Chennai, would be amalgamated with itself, VisualSoft Technologies has called off the deal, citing a delay in approval by regulatory authorities. The merged entity was expected to create a mid-size software testing and services firm with revenues of Rs 400 crores in 2006-07.
That the deal would be called off was expected, after Sashi Reddi, CEO of the AppLabs Technologies, told this newspaper in an interview on March 5 that, "More delay could be bad for both AppLabs and VisualSoft." Mr Reddi declined to comment.
In the event, the VisualSoft board, which met at the company’s headquarters here on Friday, decided to cancel the transaction. "Since the proposed scheme of amalgamation is getting delayed in obtaining the approvals from appropriate authorities, the board felt that the proposed scheme of amalgamation shall not be pursued further. As all the three companies are operating in the fast-growing IT sector such delay will not benefit the planned synergised growth. Accordingly, the board decided to withdraw the scheme of amalgamation with immediate effect," a company release said.
The main cause of the delay, as both Mr Reddi and Mr V. Krishnan, CFO of VisualSoft said, was the issue of valuation. As per the stock swap for the amalgamation, AppLabs shareholders were to get 17 equity shares of VisualSoft.
That the deal would be called off was expected, after Sashi Reddi, CEO of the AppLabs Technologies, told this newspaper in an interview on March 5 that, "More delay could be bad for both AppLabs and VisualSoft." Mr Reddi declined to comment.
In the event, the VisualSoft board, which met at the company’s headquarters here on Friday, decided to cancel the transaction. "Since the proposed scheme of amalgamation is getting delayed in obtaining the approvals from appropriate authorities, the board felt that the proposed scheme of amalgamation shall not be pursued further. As all the three companies are operating in the fast-growing IT sector such delay will not benefit the planned synergised growth. Accordingly, the board decided to withdraw the scheme of amalgamation with immediate effect," a company release said.
The main cause of the delay, as both Mr Reddi and Mr V. Krishnan, CFO of VisualSoft said, was the issue of valuation. As per the stock swap for the amalgamation, AppLabs shareholders were to get 17 equity shares of VisualSoft.