Covansys Corp. acquires PDA Software Services

Covansys Corp. announced June 3 it has acquired PDA Software Services Inc. for about $16.5 million.

The acquisition of PDA expands Covansys' portfolio of information technology capabilities for state governments and strengthens the company's business process outsourcing capabilities, particularly in the insurance industry, said Ned Lautenbach, co-chairman and chief executive officer of Covansys.

Covansys of Farmington Hills, Mich., is a global consulting and technology services company specializing in industry-specific solutions, strategic outsourcing and integration services. Its 4,400 employees work in 23 locations worldwide.

PDA of Overland Park, Kan., develops, implements and maintains systems for states required to meet federal tracking and reporting mandates of the Women, Infants & Children program. The company offers a Web-based product, FloodConnect, that helps private insurers manage flood insurance business through the National Flood Insurance Program.

"PDA's capabilities provide Covansys with market leadership in an important public sector technology segment and improved business process outsourcing capabilities," Lautenbach said. "Clients of both companies will benefit from the depth of our combined expertise and experience."

PDA employs approximately 180 full-time professionals providing products, software consulting, application development and processing services to clients nationwide. Supported industries include federal and state agencies, insurance, agrochemical and pharmaceutical. Before the Covansys purchase, PDA was a wholly owned subsidiary of Selective Insurance Group Inc. of Branchville, N.J.

"This acquisition allows our employees to do what they do best ñ focus on high-quality, custom software development and industry-specific solutions for state and local governments as well as the insurance and pharmaceutical industries," said Tom McCarthy, president of PDA.

The public-sector resources of PDA will become part of Covansys'
Public Sector Practice, which provides consulting to more than 25 states and numerous local governments and specializes in custom and packaged solutions for public retirement, health and human services, transportation, labor and justice services.

PDA's annual revenue is about $18 million. PDA's income and expenses will be consolidated into Covansys' financial statements beginning June 1. The transaction is expected to be neutral to slightly accretive to Covansys' earnings, the company said. Covansys had revenue of $404 million and a net loss of $10.5 million in 2001.