U.S. firm files suit against Polaris

By Our Special Correspondent

NEW DELHI, OCT. 2. The U.S. based information technology company, Data Inc. has filed a lawsuit against the Chennai-based software company, Polaris Software, for its failure to go ahead with the acquisition agreed upon in May this year. The case has been filed in Bergen County, New Jersey, against Polaris and its chairman, Mr. Arun Jain, by the NRI President of Data Inc., Mr. Arun Verma.

Mr. Verma, a former Indian army officer and veteran of the 1971 war, told The Hindu that the jurisdiction of the agreement signed last May between the two companies was in New Jersey.

Polaris chairman, Mr. Arun Jain, has stated that the acquisition was called off because the company's audit committee felt that the acquisition in its proposed form was not in the best interests of Polaris shareholders. The acquisition was originally coordinated by UBS Warburg and was subject to due diligence by KPMG.

Mr. Verma, on the other hand, contends that Mr. Jain had told him that the deal was not being closed because accounting for the cash down payment as required by General Accepted Accounting Practices (GAAP) might reflect poorly on Polaris financial statement and possibly affect future third party investment in the company. The agreement stipulated that Polaris would acquire Data Inc. for $21 million, of which $15 million would be in cash. The deal was originally to have been for $25 million, the amount decided in the negotiations held in March this year, Mr. Verma said. Subsequently, however, this was revised downwards and the deal was clinched at $21 million.

Mr. Verma says Data Inc. has incurred major expenses and has also told employees and clients of the impending acquisition. Besides, it revealed confidential information to Polaris which could have compromised its competitive position if the deal is not consummated. ``We even introduced Polaris to many of our contacts in India'', he said.

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Section  : Business
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