The Polaris - Orbitech Merger

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Case Details:

Case Code : FINC030
Case Length : 13 Pages
Period : 2002 - 2004
Pub. Date : 2004
Teaching Note : Available
Organization : Polaris Software Labs, Orbitech Solutions
Industry : Software, IT, Finance
Countries : USA, India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"The merger with OrbiTech is a more comfortable arrangement for we receive sixteen years of solid experience in designing exclusive software for the Banking, Financial Services and Insurance segment and the expertise of handling 10 million customers in seventy countries in one stroke. The merged entity is set to create a super mall for BFSI products." 1

- Arun Jain, CMD, Polaris Software Labs.


On May 22, 2002, India-based Polaris Software Labs (Polaris)2 announced its merger with OrbiTech Solutions (OrbiTech), owned by the Citigroup3 in the US.

This was one of the largest mergers in the software industry in the Asia-Pacific region; the combined valuation of the merged entity exceeded Rs.27 billion (bn). It was also one of the biggest acquisitions in terms of Intellectual Property Rights (IPRs).4 The merged entity would have 3,800 employees and combined revenues of over Rs.6 bn. The merger was expected to result in significant operational synergies, with significant cost savings through streamlining of infrastructure and rationalization of vendors. Analysts felt that the merger was beneficial for both Polaris and OrbiTech. Polaris gained by acquiring IPRs from OrbiTech, while OrbiTech gained the wide marketing network of Polaris.

Prior to the merger, Citigroup was the only customer for OrbiTech products, as OrbiTech was not supposed to render services to other customers.

After the merger was announced in May 2002, there were several rounds of negotiations between Polaris and Citigroup. The final agreement was signed in October 2002 under new terms and conditions.

The merged entity continued to be known as Polaris. Arun Jain (Jain), chairman & managing director and the CEO of Polaris, retained his designation while Ram Bhagwat, managing director of Orbitech became the president of the merged entity.

The merged entity had a 12-member board - seven directors from Polaris, three from Citigroup and two independent directors proposed by Jain.

The Polaris - Orbitech Merger - Next Page>>

1] 'Polaris Software Lab: Merger for mutual gains,' Suchitra Srinivas, Industrial Economist, May 30, 2002.

2] Polaris is a global software company providing quality and customized information technology (IT) solutions to several multinational clients through its 16 offices worldwide. The company is in the business of designing exclusive software for banking and financial services segment and has the expertise of handling 10 mn customers in over 100 countries.

3] Headquartered in the US, Citigroup is the world's leading financial services company providing consumer and commercial banking services, consumer finance, credit cards, life insurance, investment banking, asset management, securities brokerage and property casualty insurance services.

4] IPRs are bestowed on owners of ideas, inventions and creative expression that have the status of property. Like tangible property, IPRs give owners the right to exclude others from access to or use of their property.


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