OREANDA-NEWS. October 11, 2007. UTS focuses on development, implementation and maintenance of e-commerce solutions for governmental organizations and private companies. The volume of electronically-made state procurement in Russia is expected to reach RUR400bn (approx. $15.96bn) in 2007. 30% of this amount, or RUR120bn (approx. $4.79bn) will come through e-commerce systems established by UTS. The sector’s development will be stimulated by the new federal law and consequent government resolutions which establish a unified procedure for placing state orders, including in electronic auctions.

The payment for the UTS was made in cash based on the price to earnings 2007 ratio (P/E) of 5. Thus, the total value of the control stake amounted to $1.8m.

“I am very positive about this new acquisition. We have purchased the leader in its segment with the order book formed for the next several years. Moreover, the consolidation of the entirely new business will allow ARMADA to widen the product range and increase the volume of services provided to our customers. I am confident that our shareholders will be pleased with the new acquisition,” General Director of OAO ARMADA Alexei Kuzovkin said commenting on the deal.

Mikhail Borodovsky, General Director of UTS, added: “We are happy to merge with ARMADA, which will help us to promote our products on a national scale, since the holding is firmly positioned as one of the leading vendors of comprehensive IT solutions for governmental organizations and large corporations”.

The representatives of both companies also expressed their confidence that the merger would have a considerable synergetic effect allowing the group to enhance its efficiency in all market sectors of operation, as well as enlarge its client base, specifically, in ARMADA’s priority governmental sector.

UTS has successfully completed implementation of state procurement systems in Belgorod, Tyumen, Kaliningrad, Saratov and Perm regions and the Republic of Bashkortostan. It’s corporate client base include large companies like Alcatel, British American Tobacco and NIKoil Financial Corporation as well as about 5500 participants of the e-commerce market in TradeCable.ru, LKE.ru, PolyPipe.ru and Alco-Online.ru trading systems.