Saber Consulting buys Covansys unit
- By Ethan Butterfield
- Mar 08, 2006
Covansys Corp. will sell its state and local government practice to Saber Consulting Inc. for roughly $40 million in cash, the two companies announced today.
When the transaction is completed, the Covansys unit, based in Columbus, Ohio, will be integrated into Saber Consulting's operations. Saber, which focuses on selling IT software and services to state and local clients, is based in Salem, Ore. The companies expect to complete the transaction in second quarter 2006.
The acquisition will increase Saber Consulting's total number of employees from 250 to more than 600, and is expected to boost the company's revenue from $25 million in fiscal 2005 to $100 million in fiscal 2006, Saber said.
Covansys' state and local unit had annual revenue of $75.7 million in fiscal 2005. The unit delivers IT solutions for public retirement programs, health and human services, public health, motor vehicles, unemployment insurance, homeland security and election reform.
The combined company will have strong market presence in election management, pension administration and health and human services, Nitin Khanna, Saber's president and CEO, said in a statement.
Saber also was attracted to the Covansys unit because of its solid customer relationships and the potential it offers for future growth, Khanna said.
Saber received financial support for the purchase from Accel-KKR LLC, a private equity firm that made a large investment in Saber in January.
"We saw our initial investment in Saber as the first step in a long-term commitment to help the company realize its growth potential," said Rob Palumbo, Accel-KKR's managing director. "And we view the acquisition of Covansys' state and local government practice as a very important stepping stone towards this goal."
Accel-KKR LLC of Menlo Park, Calif., is as a private equity firms that invests primarily in IT firms with revenues between $15 and $150 million and that are positioned for growth.