KPIT Cummins Infosystems, a global IT consulting and engineering partner to manufacturing corporations has announced that they have entered into a definitive merger agreement with Sparta Consulting, a California, USA-based firm providing high end SAP solutions. The all-cash agreement is for a milestone based consideration of US$38 million which includes a bonus of US$4 million.

The merger of Sparta Consulting will further strengthen KPIT's business model to focus on select industries and achieve market leadership by creating best in class practices/offerings that help customers achieve their operational a strategic objectives.

The acquisition is expected to result in greater efficiencies and increased market share. With over 1,000 consultants in the combined entity, the SAP-led consulting practice provides a scalable alternative to Tier I companies which usually pursue larger ($25 million) multi- service opportunities. With global demand for SAP based services growing at 24+%, the SAP led consulting practice has the potential to grow into a $100 plus million business in next 3 years. Will reinforce current SAP strengths of KPIT and the strategy to create a best in class SAP practice. Sparta's dynamic team and proprietary templates/methodologies reinforces KPIT's current strengths in value added SAP solutions to Automotive, Hi-Tech and Industrials sectors. Sparta's footprint in the energy and utilities sector would provide KPIT a headstart into this adjacent space.

In addition to the existing verticals, Sparta Consulting will now also be able to address the growing SAP market in Automotive and Industrials (KPIT has 100+ customers in this space). Sparta would be able to leverage KPIT's global presence and effectively scale in regions such as Europe & Asia Pacific.

The company made this announcement during the trading hours today, 30 October 2009.