Keane Acquires Metro Information Services
- By Patience Wait
- Aug 21, 2001
Keane Inc. announced Aug. 21 it has signed a definitive agreement to purchase Metro Information Services Inc., Virginia Beach, Va., in a stock-for-stock transaction valued at approximately $135 million.
Each share of Metro common stock will be exchanged for 0.48 shares of Keane common stock.
Based on the closing stock price of Boston-based Keane as of Aug. 20, the new company would have a market capitalization of approximately $1.3 billion. Metro had about $313 million in 2000 revenue, about 8 percent of which came from government customers. Metro provides IT consulting and software development services.
As part of the purchase, Keane will also become responsible for Metro's debt, which as of July 31 was approximately $68 million. Metro shareholders will receive shares representing about 9.6 percent of the combined company.
Keane anticipates achieving $15 million in annual pre-tax cost savings. The company expects to achieve savings by combining branch offices in the same markets, and by eliminating duplicate corporate functions.
In addition, this transaction provides the company with an expanded customer base and cross-selling opportunities because of the limited overlap of the combined customer base.
"This is a powerful acquisition for Keane," said Brian Keane, president and chief executive officer. The company is adding more than 200 new customers and improving its critical mass, he said.
The transaction has been approved by Keane's and Metro's boards of directors. The merger is subject regulatory approvals and will require the approval of Metro's shareholders.
Under a separate agreement, John Fain, founder, chairman and chief executive officer of Metro, has agreed to vote his shares, which represent 40 percent of Metro's outstanding shares, in favor of the deal. He will be elected to Keane's board upon completion of the acquisition.
Keane expects to close the transaction during the fourth quarter of 2001.