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Mastech Digital Closes USD 55m Acquisition of InfoTrellis´ Services Division
Monday 17 July 2017

17 July 2017 - Pennsylvania, US-based IT services provider Mastech Digital, Inc. (NYSE MKT: MHH) has closed the acquisition of the services division of Canada-based data management and analytics company InfoTrellis Inc., to strengthen Mastech Digital's suite of service offerings, the company said.

The transaction is valued at USD 55m, with USD 35.7m paid in cash at closing and USD 19.3m deferred over the next two years. The deferred purchase price is contingent upon the acquired business generating specified EBIT targets during the two years following the closing and is payable in cash and in installments following each year, if earned.

Funding for the transaction will consist of a combination of debt and equity.

A new USD 65m facility with PNC Bank will provide debt financing for the transaction, refinance Mastech Digital's existing debt with PNC and provide borrowing capacity for the future. The equity financing will be completed through a USD 6m private placement of newly issued shares of Mastech Digital common stock to Mastech's founders and majority shareholders, Ashok Trivediand Sunil Wadhwani. 

The acquired business, to be branded as Mastech InfoTrellis, will offer project-based consulting services to customers in the areas of master data management, data integration, and big data, and at the same time strengthen Mastech Digital's digital transformation services capability.

Mastech Digital expects the acquisition to create an opportunity to cross sell a broader range of service offerings, and provide better economies of scale and improved operational efficiencies resulting from shared support services integration.

In connection with the acquisition, Messrs. Trivedi and Wadhwani entered into an equity support agreement with Mastech Digital pursuant to which they agreed to future purchases of newly issued Mastech Digital common stock at a price per share based on the market price of the common stock at the time of any purchases solely to the extent necessary to fund the deferred purchase price payments described above in the event that Mastech Digital has insufficient funds to make these payments.

InfoTrellis has over 200 associates globally, a customer-base of more than 40 blue chip customers in North America, offices in Canada and Texas, US, as well as a global delivery centre in India. Mastech Digital has nearly 1,300 associates globally, a customer-base of over 300 companies, seven offices across the US, as well as a delivery centre in India.

Mastech Digital (NYSE MKT: MHH) is a national provider of IT services focused on solving digital transformation challenges. Mastech Digital reported revenues of USD 132m for fiscal year ended December 31, 2016.

The company's IT staffing services span across digital and mainstream technologies while its digital transformation services include, SAP HANA, and digital learning services. A minority-owned enterprise, Mastech Digital has offices across the US and India.

Mastech Digital's M and A Advisors included Chesapeake Group, Blank Rome, LLP, Blake, Cassels and Graydon, LLP and Khaitan and Co. Messrs. Trivedi and Wadhwani were advised by McGuireWoods LLP.
Date Published: 17/07/2017
Target: InfoTrellis Inc
Country: USA
Deal Size: 55m (USD)
Sector: IT/Online Services
Type: Corporate acquisition
Financing: Cash
Status: Agreed
Buyer: Mastech Digital, Inc
Buyer Advisor: Chesapeake Group , Blank Rome , Blake, Cassels and Graydon , Khaitan and Co.