Indra acquires one of brazil's leading it companies and makes Brazil its top international market

Indra, Spain's number one technology company and a leader in Europe and Latin America, has reached an agreement to acquire 100% of the shares of Politec, one of the main Brazilian IT companies. With this operation, Indra's international business will represent 47% of the company's total sales, up from the current 40%.

Brazil will be Indra’s second largest country (10% of revenues), turning Latam (22% of revenues) into the first regional market within Indra´s international activities.

With the acquisition of Politec, Indra will become in a top tier player in the Brazilian IT services market, with pro-forma revenues of 557 R$M (approximately 250 €M) and a diversified position in the main vertical markets.

This transaction generates significant revenue synergies, both from cross selling of Indra’s solutions portfolio through Politec’s sales network and client base, and from the possibility to undertake larger projects. Additionally, it strengthens Indra’s potential to grow in the Security & Defense and Transport & Traffic markets.
Politec is one of the largest companies in the Brazilian IT Services sector, founded 40 years ago, with a solid position in the verticals of Energy and Industry, Financial Services and Public Administrations, having reached sales of c. R$400 R$M in 2010 (approximately 180 €M), and employing 5,000 professionals with a broad sales force network across the most relevant Brazilian states. Its founding partners (1) owned a 84.66% stake; Mitsubishi Corporation a 8.77%, being the remaining 6.57% owned by other minority shareholders.

The agreement reached implies the following transactions:

• Indra will contribute 100 R$M in capital to its subsidiary Indra Brasil
• Acquisition of the 6.57% minority shareholder stake for 4.5 R$M (approximately 2 €M) in cash, payable at the closing of the transaction; this implies an EV/2010 Sales multiple of 0.6x
• Acquisition of the 93.43% stake owned by the founding partners and Mitsubishi Corporation, with payment in 2014, for 219.5 R$M (approximately 98 €M) on the basis that Politec and Indra Brasil reach together in 2013 revenues of 1,000 R$M (22% 2010-13 CAGR) and an EBIT margin of 9%. This price implies, estimating a combined net debt of 90 R$M at the end of 2013, an EV/2013 Sales multiple of 0.9x.

The acquisition is expected to close before September 30th, 2011.

Indra in Brazil

Indra has had a presence in Brazil since 1996, with offices in Sao Paulo, Barueri, Belo Horizonte, Brasilia and Rio de Janeiro. Until now it had 1,500 professionals and a Software Lab in Campinas, which functions as an advanced R+D laboratory.

Indra is a leading Information Technology multinational. It is the number two European company in its sector by R+D investment, with close to €500 M invested in the last three years. Sales in 2010 reached €2,557 M. It has customers in over 110 countries.