eMudhra (EMUDHRA) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of a 51% controlling stake in Cryptas International GmbH expands digital trust services into the EU, leveraging an established customer base and regulatory expertise.

• Enables access to eIDAS accreditation via Prinsheim GmbH, allowing provision of digital signature and trust services in Europe.

• Enhances solutions portfolio with qualified electronic signatures, identity management, and secure authentication, complementing existing server-side offerings.

• Provides a robust platform to scale operations, drive innovation in compliance and digital identity, and expand into regions with limited current presence.

• Cryptas' strong customer base in banking, financial services, government, and enterprise sectors offers cross-selling opportunities.

Financial terms and conditions

• Immediate cash consideration of $5 million or €5 million for the 51% stake, with additional payment based on 10x EBITDA for 2026.

• Put/call option for the remaining stake (10% or 49%) between 2028 and 2030 at 10x EBITDA or minimum 1x revenue, payable in cash or share swap.

• Cryptas has minimal debt, with some mezzanine capital from the promoter included in the equity valuation.

Synergies and expected cost savings

• Ability to replace third-party CA solutions with in-house products, generating immediate savings and incremental revenue of about $1 million annually.

• Significant cost reduction potential by offshoring low-end and other work to India, targeting improved profitability and EBITDA margins over the next two years.

• Combined strengths expected to accelerate innovation in digital identity, compliance, and secure digital transformation, supporting demand for paperless, secure, and legally compliant workflows.

• Employee costs currently represent 55-60% of total costs, offering substantial room for margin improvement through outsourcing.