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Mastech Digital strikes $55 million deal to acquire InfoTrellis

July 10 2017

IT staffing provider Mastech Digital Inc. (NYSE MKT: MHH) agreed to acquire the services division of InfoTrellis Inc., a Canada-based information management consulting and technology services company that provides project and consulting services in master data management, data integration and big data.

The acquired business will be branded as Mastech InfoTrellis.

The transaction is expected to close this month, subject to customary closing conditions. It is valued at $55 million, with $35.7 million paid in cash at closing as well as a deferred $19.3 million, which is contingent upon the acquired business generating specified EBIT targets during the next two years.

Mastech Digital expects the deal to provide the ability to participate in larger digital transformation deals and the opportunity to cross-sell a broader range of service offerings. Mastech Digital also expects larger scale, improved operational efficiencies and an expanded global delivery model, as well as better economies of scale from shared support services integration.

“We began transforming Mastech into a digital transformation services company a year ago when we launched our new name ‘Mastech Digital’ and recast our service offerings,” President and CEO Vivek Gupta said. “The acquisition of InfoTrellis will be a significant milestone in that journey. I am delighted with the capabilities InfoTrellis brings to the Mastech Digital family and am excited about creating a combined organization that will deliver world-class services around data management & analytics in its expanded portfolio of digital transformation services.”   

The funding for the transaction will consist of a combination of debt and equity. A new $65 million 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 $6 million private placement of newly issued shares of Mastech Digital common stock to Mastech’s founders and majority shareholders, Ashok Trivedi and Sunil Wadhwani. 

InfoTrellis reported revenues of $22 million for its latest fiscal year ended June 30, 2016. It counts more than 200 associates globally, and more than 40 customers in North America. It has offices in Toronto, Canada, and Austin, Texas, as well as a global delivery center in Chennai, India.

Mastech Digital has nearly 1,300 associates globally, a customer-base of more than 300 companies, seven offices across the US, as well as a delivery center in New Delhi, India. Mastech Digital reported revenues of $132 million for its last fiscal year ended Dec. 31, 2016.

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