EXHIBIT 99.1
(COVANSYS(R) LOGO)
FOR IMMEDIATE RELEASE
COVANSYS ANNOUNCES AGREEMENT TO SELL ITS STATE
AND LOCAL GOVERNMENT PRACTICE TO SABER
TRANSACTION WILL ENABLE COVANSYS TO FOCUS ON HIGHER-GROWTH,
HIGHER-MARGIN GLOBAL OUTSOURCING BUSINESS
FARMINGTON HILLS, MI, March 8, 2006 - Covansys Corporation (NASDAQ: CVNS), a
global consulting and technology services company, today announced that it has
reached a definitive agreement with Saber Consulting, Inc., a privately-held,
leading provider of software and services to state and local governments, to
sell its state and local government practice for up to $40 million in cash.
Saber Consulting is a portfolio company of Accel-KKR, a leading
technology-focused private equity firm. PDA Software Services (PDA), a company
Covansys acquired in 2002, is not part of this transaction. The state and local
government practice had revenue and income from operations of $75.7 million and
$2.8 million, respectively, for the year ended December 31, 2005.
Covansys' state and local government practice is a leader in helping state and
local governments meet both their enterprise and domain-specific IT needs in
order to realize cost savings and improve business process quality and
productivity. It currently provides technology solutions and services to dozens
of states and local governments and employs approximately 350 individuals.
Raj Vattikuti, Covansys' President and Chief Executive Officer, said, "We are
pleased to announce this transaction because it will allow Covansys to more
fully focus on its global outsourcing business. This is clearly the right
transaction for us and we look forward to delivering improved results and
creating additional value for our shareholders following the successful
completion of the sale. We believe Accel-KKR and Saber are ideally suited to
take the state and local government practice to the next level."
Ben Bisconti and Rob Palumbo, Managing Directors of Accel-KKR, said, "This
transaction is an excellent example of how a focused private equity firm can
work with a successful public company to achieve corporate strategic objectives
while continuing to serve the best interests of customers and employees, and
without interruptions to the technology innovation process. We believe this is
an exciting event in the public sector software and services space, and we are
confident that the combination of Covansys' state and local government practice
and Saber will provide tremendous growth opportunities and reinforced industry
and market
leadership to the merged company going forward, as well as enhanced services and
offerings to customers across the country."
Arvind Malhotra, Senior Vice President of Covansys' state and local practice
said, "The entire state and local practice management team and I are excited
about this transaction and its many benefits for our customers and employees. As
a private company, we will be able to focus on long-term growth and enhancing
service for our customers. Accel-KKR has tremendous resources and expertise, and
we look forward to joining forces with Accel-KKR and Saber as we move forward."
Under the terms of the agreement, Saber Consulting will acquire the assets of
the state and local government business. The agreement does not include
Covansys' business process outsourcing (BPO) business or any of the assets or
contracts that Covansys acquired with its acquisition of PDA Software Services
in 2002.
The closing of the transaction is contingent on the Company's ability to meet
certain closing conditions.
ABOUT SABER
Saber, founded in 1997, is headquartered in Salem, OR, with offices in
Sacramento, CA, Annapolis, MD, Mequon, WI. The privately held company has deep
customer relationships with state and local government entities across the
country, providing software and services that underpin essential functions such
as voter registration, election management and forms and document processing.
For more information, please visit www.saberconsulting.com.
ABOUT ACCEL-KKR
Accel-KKR is a technology-focused private equity firm that invests primarily in
technology businesses with $15 million to $150 million in revenue that are well
positioned for top-line and bottom-line growth. At the core of Accel-KKR's
investment strategy is a commitment to developing strong partnerships with the
management teams of its portfolio companies and a focus on building value
through the contribution of unique financial, strategic, technical, and
operational resources. Accel-KKR has a particular focus on the following
transactions: Recapitalizations of family-owned or closely-held private
companies, divisional buyouts of larger companies, and going-private
transactions. For more information, please visit www.accel-kkr.com.
ABOUT COVANSYS
Headquartered in Michigan, Covansys Corporation (NASDAQ: CVNS) is a global
consulting and technology services company specializing in industry-specific
solutions, strategic outsourcing and integration services. Clients gain
competitive advantage by leveraging our unique global delivery capability to
achieve rapid deployment, world-class quality and reduced costs. Covansys is
known for strategic outsourcing and technology solutions in the healthcare,
financial services, retail and distribution, manufacturing, telecommunications
and high-tech industries. Founded in 1985, with 7,000 consultants and employees
worldwide, Covansys was one of the first U.S.-based IT services companies to
establish offshore facilities in India, and is a pioneer in seamlessly
integrating offshore capabilities into its offerings. Two of the company's three
wholly owned development centers in India are assessed at Level 5 in SEI CMM(R).
All three are ISO 9001:2000 certified and assessed at Level 5 in PCMM(R), and
five global facilities are BS7799-2:2002 certified. Visit our Web site:
http://www.covansys.com.
SAFE HARBOR STATEMENT
With the exception of statements regarding historical matters and statements
concerning our current status, certain matters discussed in this press release
are forward-looking statements that involve substantial risks and uncertainties.
Such forward-looking statements may be identified by the words "anticipate,"
"believe," "estimate," "expect" or "intend" and similar expressions. Our actual
results, performance or achievements could differ materially from these
forward-looking statements.
Factors that could cause or contribute to such material differences include
impact of changes in estimates on fixed price projects, internal control
weaknesses, variability of operating results, failure to recruit, train and
retain skilled IT professionals, the failure of our agreement to sell the state
and local practice of our Public Sector business to close, exposure to
regulatory, political and general economic conditions in India and Asia, short
term nature and termination provisions of contracts, competition in the IT
services industry, economic conditions unique to clients in specific industries,
the success of the Company to negotiate contract renewals at comparable terms,
public sector budget constraints, limited protection of intellectual property
rights, infringement by our services on the property rights of others, legal
liability and damage to our professional reputation from claims made against our
work, and risks related to merger, acquisition and strategic investment
strategy.
CONTACTS
For Accel-KKR
Joseph Kuo / Andrea Calise
Kekst and Company
212-521-4800
For Saber
Bob Patterson
MKTX, Inc.
503-646-6589
bobp@mktx.com
For Covansys Corporation
Investors: Media:
James Trouba Michelle Jones
Tel: (248) 848-8896 Tel: (248) 848-2269
jtrouba@covansys.com mjones@covansys.com