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TechM frontrunner to buy media solutions firm BORN

Tech Mahindra is likely to sign the deal for $120 million in a couple of weeks, they said.

, ET Bureau|
Last Updated: Nov 05, 2019, 11.09 AM IST|Original: Nov 05, 2019, 11.09 AM IST
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Agencies
Tech-Mahindra
BORN has offices in NY, NJ, London, Toronto, Tokyo, Singapore, Chennai and Pune, and employs over 400.
Indian Information Technology Enabled Services (ITES) major Tech Mahindra is in final stages of negotiations to acquire BORN (formerly Group FMG), a global marketing and media solutions agency operating in the USA, Europe and Asia, two persons aware of the development told ET.

Tech Mahindra is likely to sign the deal for $120 million (₹850 crore) in a couple of weeks, they said.

Besides Tech Mahindra, a US-based private equity fund is also competing to acquire BORN. However, ET could not ascertain the identity of the fund..

BORN, owned by PE funds True North Capital and Zodius Capital, provides creative design, content production, ecommerce and digital marketing services across all channels – print, web, social, mobile, advertising and broadcast. Its marquee clients include Sotheby’s, Red Bull, SkullCandy, Harley Davidson, Ferragamo, Fossil, Ethan Allen, Thomas Pink, Glanbia, Tetley Tea and Maxim.

Avendus Capital is advising BORN on the sale.

A clutch of global and Indian ITES majors like Accenture, Cognizant, IBM and Tech Mahindra were in race to acquire BORN, ET reported in March.

BORN has offices in NY, NJ, London, Toronto, Tokyo, Singapore, Chennai and Pune, and employs over 400.

Spokespersons for Tech Mahindra and True North declined to comment, while mails sent to Zodius Capital did not elicit any response till press time.

Group FMG was formed in 2011 after integrating two companies –FMG and Whitefield Analytics – and in March 2011, True North (formerly India Value Fund) acquired a controlling stake in FMG for about $20 million.

BORN outsourced a majority of its advertising business to offices in Chennai amd Pune, benefiting from cheap Indian labour. More than half of BORN’s team works in Chennai in areas of production and photo retouching.

In 2012, Group FMG expanded presence by acquiring New Yorkbased Pod1 Inc, a creative digital agency which had clients like TAG Heuer, The Limited, Stuart Weitzman, Salvatore Ferragamo, Nanette Lepore, Net-a-Porter and Lord & Taylor.

Tech Mahindra, India’s fifth-largest IT firm, has expanded its global footprint through multiple buyouts in recent past.

In July, it acquired about 65 per cent in US-based strategic design consultancy firm Mad*Pow for $70 million (₹490 crore). In June, Tech Mahindra made acquisition of Canada-based Objectwise Consulting Group Inc. It acquired the Netherland-based IT firm Dynacommerce Holding BV, which provides software platforms and services to telecommunication clients, in February.

One of the earliest homegrown PE funds — True North manages about $3 billion under six funds. It has a portfolio of companies such as Fedbank Financial Services, Magma Fincorp, Homefirst Finance, Infinity Fincorp, KIMS Hospitals, Trivitron, Cloudnine Hospitals, Hicare and VKL Spices.

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In May, True North exited another portfolio — food ingredients company VKL Seasoning — by selling its 55 per cent stake to Swiss fragrance major Firmenich.

IT services and technology was among the top three sectors that has seen major M&A activity in the first half of 2019 in India, according to data compiled by Thomson Reuters.

The sector saw deals worth $5.3 billion, more than a two-fold rise from the year earlier, data showed. However, overall merger and acquisition activity was down 51.5 per cent compared to the first six months of 2018.

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