Under the terms of the sale contract, Telstra will continue to provide telecommunication services and hosting to Ebix. This will be effective from January 1, 2008. The closing of the transaction is slated to be completed on January 2.
TeBS was acquired by Telstra in 1999 and 2000. The business enabled general insurance policies to be transacted electronically with insurance companies (B2B from intermediaries/brokers/agents). The subsidiary employed 44 people and was predominantly based in Sydney.
Approved by the Telstra Board, the divestment followed a ‘review’ that determined that the insurance transaction processing business was not core to
Telstra's network and business application services strategy and that there were better growth opportunities for the business outside of Telstra.
“Telstra and Ebix will work together to ensure a seamless transition of the business. Bringing the two businesses together will create opportunities to extend the range of e-commence facilities available for the insurance industry," said Telstra Enterprise and Government Group managing director, David Thodey. "Insurers and brokers should also benefit from improved end to end integration of back office and transaction processing systems.”
Ebix provides application software products for the insurance industry, ranging from underwriting systems, broking systems, data exchanges and software development services.
The company has operations in the United States, Australia, Singapore, New Zealand, UK, and Canada.
Robin Raina, chairman, president and CEO of Ebix, said he was excited about the acquisition on many accounts.
“Firstly it brings a revenue base to the company that is 90 percent recurring. Secondly it is a business that is likely to be extremely accretive to Ebix earnings per share (“EPS”) in the near and long term future,” he said.
No financial advisors were involved in the transaction from the Ebix side, while PriceWaterhouseCoopers served as financial advisors to Telstra for this transaction.
Telstra sells subsidiary for $50M to US company
By Lilia Guan on Jan 7, 2008 7:23AM