This document discusses a business combination where Keane Inc. acquired Metro Information Services through a stock-for-stock transaction. Keane issued 15,978,804 shares valued at $162 million to acquire Metro. As a result of the transaction, Keane stockholders owned 90.2% of the combined company, while former Metro stockholders owned 9.8%. Keane allocated the $162 million total cost to Metro's tangible and intangible assets and goodwill based on their estimated fair values. The acquisition was accounted for using the purchase method, with Keane adding Metro's assets and liabilities to its balance sheet.

1. 1
BUSINESS
COMBINATIONS

2. 2
A business combination is bringing together two or more
Previously separate companies under Common control.
Control over a company gained by acquiring a majority of
he company's voting shares or by acquiring the net assets
of the other company.

3. 3
Types of Business CombinationsTypes of Business Combinations
AA CompanyCompany
(a) Merger
A Company
B Company

4. 4
Types of Business CombinationsTypes of Business Combinations
(b) Consolidation
CC CompanyCompany
AA CompanyCompany
BB CompanyCompany

5. 5
Types of Business CombinationsTypes of Business Combinations
AA CompanyCompany
B Company
(c) Stock Acquisition(c) Stock Acquisition
AA CompanyCompany
B Company

6. 6
ABOUT KEANE INC:-ABOUT KEANE INC:- ( THE ACQUIRING( THE ACQUIRING
COMPANY)COMPANY)
Industrial classification (services-Computer Program)Industrial classification (services-Computer Program)
Keane is one of the worldKeane is one of the world great informationgreat information
technology services firms. In business sincetechnology services firms. In business since
1965, 50 offices in USA, Canada, and UK,1965, 50 offices in USA, Canada, and UK,
Keane helps his clients leverage technology toKeane helps his clients leverage technology to
optimize business performance through useoptimize business performance through use
and management of information technology.and management of information technology.
Keane has more than 8,200 employees andKeane has more than 8,200 employees and

7. 7
ABOUT METROABOUT METRO :-( THE ACQUIRED:-( THE ACQUIRED
COMPANY)COMPANY)
Industrial classification (services-computerIndustrial classification (services-computer
program)program)
Metro Information services, Inc. provides aMetro Information services, Inc. provides a
wide range of IT consulting and customwide range of IT consulting and custom
software development services. Servicessoftware development services. Services
offered by metro include application systemoffered by metro include application system
development, IT engineering, systemsdevelopment, IT engineering, systems
consulting, project outsourcing and generalconsulting, project outsourcing and general
support services.support services.

8. 8
KEANE ACQUISITION OF METRO INFORMATION
SERVICE
Keane acquired all the voting shares of metro in a
stock-for-stock transaction, accounted for using the
purchase method.
Total Purchase Price US$ 162Million, Including
assumption of debt.

9. 99
BUYER
Metro shareholders
15,978,804 shares
TARGET
7,669,826 shares
(0.48)
Stock-for-stock
Transaction

10. 10
Metro
shareholders
Keane
shareholders
As a result of
stock transaction
Ownership percentage after
Merger:
Keane stockholders 90.2%
Metro stockholders 9.8%

11. 11
The total cost of the merger was $162,449 determined
as follows ( in thousands):-
 Fair value of Keane shares issued to Metro shareholders
In exchange for their surrendered stock…………………$141,58
Fair value of options exchanged……………………………
$6,754Cost of financial advisory,Legal & accounting fees…..
$8,500
Transaction bounses paid to some of metro officers….
$5,610
TOTAL………………………………………………………
$162,449

12. 12
Allocation of Cost of the acquired Company
 Under the Purchase method of accounting for
business combinations, the cost of the acquired
company must be allocated to the assets
acquired and liabilities assumed based on their
estimated fair market values on the date of
combination.
 Any excess of the total costs over the Net assets
of the acquired company is assigned to
Intangible assets if any and to goodwill.

13. 13
Based upon the valuation of tangible and intangible
assets acquired and liabilities assumed, keane has
allocated the total cost of the merger to the net
assets of Metro as follows:-(in thousands)
Net tangible assets…………………………………
$(37,984)
Net Intangible assets………………………………
$46,100
Goodwill……………………………………………....
$154,333
TOTAL
$162,449

14. 14
The following table presents the amounts assigned by keane Inc. to
each of the major assets and Liabilities acquired of Metro at
acquisition date:-( in thousands)
Cash $622
Accounts receivable $40,810
Other current assets $1,004
Property, plant & equipment,net $2,790
TOTAL ASSETS
$45,226 (A)
Accounts payable $3,583
Accrued compensation $9,800
Other liabilities $3,889
Note payable
$65,938
Total Current liabilities $83,210
(B)

15. 15
Accounting after acquisitionAccounting after acquisition
Under the purchase Method of accounting for a
business combination, the acquiring company
adds to its balance sheet the assets acquired
and the liabilities assumed, and reduces its cash
account or increases its equity account to reflect
the surrendered resources.

16. 16
Net current assets 313,614 42,436 356,050
Fixed tangible assets 43,053 2,790 45,843
Intangible assets 43,819 46,100 89,919
Goodwill 71,984 154,333 226,317
Total assets 472,470 718,129
Liabilities 75,858 83,210 159,068
Capital stock 118,321 148,339 266,660
Deferred merger cost 14,110 14 ,110
Retained earnings 278,291 278,291
Total 472470 718,129
Before merger Acquired assets
& liabilities
After merger
KEANE INC. BALANCE SHEET
(in thousands)
+
+
+
+
=
=
=
=
+
+
=
=
+ =

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THE ENDTHE END