NSTC Ness Technologies, Inc. (MM)

Citigroup Inc.’s (C) venture capital unit is set to acquire Ness Technologies Inc. (NSTC). The companies have entered into a definitive merger agreement in this context. Under the agreement, an affiliate of Citi Venture Capital International will pay $7.75 per share in cash in a transaction valued at about $307 million. This purchase price represents a 16% premium to the closing price of Ness Technologies’ stock on Friday.

The deal is expected to be accomplished in the next three to six months. It is, however, subject to certain closing conditions, including approval from the company's stockholders, antitrust regulatory approvals and other customary closing conditions.

Citi Venture Capital International, a part of Citi Capital Advisors, is a leader in global emerging markets’ private equity investing, and currently manages over $7 billion in equity investments and committed capital. Ness Technologies is a global provider of IT and business services and solutions with expertise in software product engineering as well as system integration, application development, consulting and software distribution.

The deal is a strategic fit for Ness Technologies as it can continue to grow by strengthening its partnership with Citi Venture Capital International and thereby provide more value for its stockholders. Increasing its investment in Ness also offers Citi Venture Capital International a prospect to boost its business.

Citi currently retains its Zacks #3 Rank, which translates into a short-term Hold rating. Also, considering the fundamentals, we are maintaining a long-term Neutral recommendation on the stock. On the other hand, Ness Technologies currently retains its Zacks #2 Rank, which translates into a short-term Buy rating. Also, the stock has a long-term Outperform recommendation from us.

 
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