Five-year agreement with Covansys said to generate upward of $150 million
Farmington Hills, MI — April 27, 2004 — Strategic outsourcing and integration services provider Covansys Corp. said today that its Board of Directors has approved a long-term Master Services Agreement ("MSA") and a Stock Purchase Agreement ("SPA") with the Fidelity Information Services Inc. subsidiary of Fidelity National Financial Inc., one of the world's largest providers of information-based technology solutions and processing services to financial institutions and the real estate industry. The MSA will make Covansys the primary provider of outsourced information technology (IT) services to FNF.
The alliance with FNF, which is expected to generate an anticipated $150 million in revenues over the next five years, combines Covansys' position in strategic outsourcing and integration services, including its offshore service capabilities in India, with FNF's experience serving financial institutions and the real estate industry with information-based technology solutions and processing services.
Covansys said it expects to realize a number of financial and strategic benefits as a result of its multi-year MSA with FNF, including an increase in annual revenues by over five percent by 2005, the ability to add additional scale to the company's client support capabilities in India, and the opportunity to develop IT outsourcing solutions for FNF's clients.
Martin Clague, president and CEO of Covansys, commented, "This strategic partnership with FNF gives Covansys a unique opportunity to develop solutions that integrate technology, services and processes for many of the biggest names in the financial services industry."
William Foley, II, chairman and CEO of FNF, said the investment in Covansys is a strategic one for his company, as well. "Prior to this investment, FNF's global outsourcing activities consisted of project-based, contractual relationships with several offshore service providers," he explained. "While the absolute cost savings in offshore outsourcing are compelling, we have been searching for a strategic partnership that not only optimizes our technology delivery efforts from a cost, quality and time-to market perspective, but also improves our competitive advantages in generating incremental revenue from our financial institution customer base. With this significant investment in Covansys and our representation on the Board of Directors, we have found an outstanding U.S.-based IT services partner with well established operations in India that allows FNF to accomplish these objectives."
Under the terms of its SPA with FNF, Covansys will issue FNF approximately 8.7 million shares of common stock at a price of approximately $104.4 million and four tranches of warrants, each of one million additional shares of Covansys common stock priced at between $15 and $24. FNF will also purchase approximately 2.3 million Covansys common shares from Raj Vattikuti, co-chairman and founder of Covansys.