ChinaSoft International to Acquire Catapult Systems to Accelerate Expansion into Emerging Technologies

Nov 13, 2013, 19:30 ET from ChinaSoft International Ltd.

BEIJING, HONG KONG and AUSTIN, Texas, Nov. 13, 2013 /PRNewswire/ -- ChinaSoft International Limited ("ChinaSoft" or "the Company") (SEHK: 354), announced today that it has entered into an agreement to acquire Catapult Systems, LLC ("Catapult"), a premier Microsoft-focused consulting company headquartered in Austin, Texas, for an aggregate cash consideration of US$41.0 million plus additional consideration upon satisfaction of certain post closing events. As of September 30, 2013, Catapult employed 423 professionals in the US. It generated revenues of US$62.3 million for the twelve-month period ending September 30, 2013, an increase of 24% from the preceding 12 month period, with a gross margin of 37.2% and an adjusted EBITDA margin of 9.5%

As the premier provider of Microsoft integration services, Catapult is positioned at the forefront of the current "digitization" movement worldwide. Catapult Systems implements innovative technology solutions that enable clients to achieve business objectives while deriving the maximum value from their Microsoft technology investments. Catapult has launched four new capabilities over the past several years in Managed Services, Creative Services, Mobile Applications, and Cloud Services, all to take early market leadership positions in emerging technologies and market demand. Specifically, Catapult's new Cloud Services offering has already positioned itself as one of Microsoft's leading cloud migration partners in the US.

The combined ChinaSoft-Catapult organization would offer numerous benefits to both companies.  With the addition of Catapult's Gold and Silver competencies, the combined company will be one of the most accredited and certified Microsoft partner in the world immediately, raising ChinaSoft's visibility and credibility on a global scale.  ChinaSoft would be able to broaden its service offerings globally while  Catapult Systems can leverage ChinaSoft's scale, offerings, financial resources, and global footprint to help fuel its growth in the U.S. and abroad.

Increased SMAC Capabilities.

With the business combination, ChinaSoft will be able to leverage Catapult's full set of capabilities in Social, Mobile, Analytical and Cloud (SMAC).  Catapult's User Experience-led approach to development of mobile and cloud solutions based on Microsoft's Windows Azure Cloud and Office 365 platforms (SharePoint Online, System Center, Yammer) makes it the Microsoft system integrator of choice for enterprises seeking the convergence of both devices and services through the use of modern applications. Through Catapult's digital marketing platform the Company is gaining valuable experience in next generation customer acquisition business models, as well as international prospect engagement specifically in the public- and private-cloud domain. Specifically, through its various internal social networking portals (Idea Inbox, Judo), Catapult uses social intranet tools to raise asset utilization rate, encourage innovation, improve and retain employee ideation, as well as human resources management. It is from this basis that Catapult developed Social Intranet solutions and began to market these solution products to its customers.    

Higher Level of Service Offerings.

The acquisition of Catapult will also enable ChinaSoft's existing business with Microsoft to move to an higher level of service offerings, aligning ChinaSoft with its strategic customer as Microsoft transforms itself in offering next generation technologies. The business combination will allow ChinaSoft to expand its relationships with its customer base across Microsoft, including high-end consultancy services.  The combined company with high-end capabilities will become a new technology premium service provider, offering end-to-end services to create reliable, extensible and high-quality custom applications. Catapult's focus on "Solution Accelerators" (emphasized by Microsoft with best practices and innovative process and user experience) will serve to drive the Microsoft "Devices & Service" business agility to the market. 

Expanded Global Delivery Capabilities.

Given that Catapult currently has no off-shore delivery components, it would be able to start leveraging ChinaSoft's competitive cost offshore resources on some of its existing engagements (application development, SharePoint, report writing, testing, QA, etc.). This would help increase profit margins on those engagements. Catapult will immediately experience a large increase in capacity for larger projects, in addition to having the added option for delivery to present to their existing client base as well as new clients.  Catapult's clients and management have already become accustomed to the concept of remote delivery (near-shore) through their Remote Delivery Center (RDC).  Catapult would also be able to replicate, expand, and complement its U.S. based Managed Services and Cloud Services delivery teams using ChinaSoft's competitive cost model in China now and later in India.  ChinaSoft will also leverage Catapult's RDC high-end consultants to expand into multiple delivery centers to provide near-shore and off-shore capabilities globally. 

"Catapult's service capabilities and strong Microsoft credentials and reputation will help ChinaSoft broaden our service offerings and market opportunity, strengthen our value proposition to new and existing customers in China and globally" Says Dr. Henry Chen, Chairman & CEO of ChinaSoft International. "Catapult's new capabilities in high growth areas such as managed services, creative, mobile and cloud services is also aligned with ChinaSoft's strategic focus on innovative and emerging technologies." Also through the acquisition, Catapult is able to start leveraging ChinaSoft's economies of scale and breadth of capabilities, providing a high-quality delivery network of professional IT services.

ChinaSoft strongly believes that all over the world the IT services business model is changing due to the evolution of information technologies like cloud computing, social networking, mobile communications and big data analytics. As part of its growth strategy set in 2011, ChinaSoft embraced the Professional, Outsourcing and Emerging (POE) structure. The Company will pursue growth in its traditional IT professional consulting & solutions business (P) and outsourcing business (O) while pushing into innovative and emerging technologies (E) such as cloud computing and mobile communications. The Company believes that this transformation is in alignment with the strategies of its customers such as Microsoft, Alibaba, China Mobile, and Huawei.

Stifel, Nicolaus & Company, Incorporated acted as exclusive financial advisor to ChinaSoft. Pryor Cashman LLP acted as legal counsel to ChinaSoft.

About ChinaSoft International Limited (SEHK:354)

Founded in 2000, ChinaSoft International Limited is a listed company on the Hong Kong Stock Exchange with its code of 354.HK. It is a large China based comprehensive software and information services provider, ranging from end-to-end services of consulting, solution, outsourcing and talent training. It serves clients in manufacturing, finance, telecommunication, high-tech, transportation, energy and also the government. The Company provides global services to over 100 multinational companies with close to 19,000 employees located worldwide based in 25 cities including mainland China, Hong Kong, Princeton, Seattle, London, Tokyo and etc. For more information, please visit

SOURCE ChinaSoft International Ltd.