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| Aegis eyes Nasdaq-listed firm in $132 mn deal |
| BS Reporter / Mumbai Mar 03, 2009, 00:25 IST |
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The company has written to the ICT board for an all-cash transaction at $8 per share.
Beating slowdown blues, Aegis — the business process outsourcing (BPO) arm of the Essar Group — has formally proposed to acquire the Nasdaq-listed ICT Group. If it comes through, this will be its 12th acquisition.
Aegis has written to the board of ICT, seeking its approval for acquisition of all the latter’s outstanding shares, at $8 per share in an all-cash transaction. The total acquisition value will then be around $132 million (around Rs 680 crore).
Till recently, Aegis was in the race to acquire the BPO operations of Satyam Computer Services. However, this seems to have taken a back seat, since the government-appointed board of Satyam has ruled out any part-sale.
The acquisition of ICTG is subject to customary due diligence, negotiation and implementation of a definitive agreement. And, completion of required regulatory approvals. In writing to the ICTG board, Aegis is seeking to effect the transaction on a friendly basis.
“The combined business will offer a wider set of services and solutions to both companies’ clients, enabling us to broaden and deepen our relationships with them,” said Aparup Sengupta, Managing Director and Global CEO of Aegis.
With the acquisition of PeopleSupport in August 2008 for $250 m (around Rs 1,250 crore), Aegis’ revenue had touched $450 m (around Rs 2,300 crore). ICTG has over 40 operation centres through North America, Europe, Latin America, Australia, the Philippines and India.
This offer, according to Aegis, represents a premium of about 71 per cent over the 30-day average closing price of ICTG shares. And a 122 per cent premium above the closing price of these shares as on February 27, said Aegis in a statement. The combined company would bring together a significant diversity of clients, expanded geographic footprint and substantial scale of operations, it added.
ICTG’s stock price was up by 81 per cent today at the start of trading, at $6.50, on the Nasdaq. The company had a net loss of $21.4 m, or $1.34 per share for the fourth quarter ending December 31, 2008, compared to one of $2.95 m or $0.19 per share in the corresponding period last year. Total revenue for the quarter declined to $101.6 m, from $112.5 m in the same period a year ago. For the full year 2008, net loss widened to $23.3 m. Total revenue was $428.2 m, down from $453.6 m in the prior year.
Looking ahead to the first quarter, the company expects a loss in the range of $0.04 - $0.08 per share. The company currently expects its core business revenue for the first quarter to be relatively flat.
Incidentally, the Indian IT industry in 2008 was among the top three sectors that witnessed mergers and acquisitions. Avendus Capital expects to see $3-3.5 billion worth of M&A deals globally in the IT sector for 2009. The share of IT-ITeS in the overall M&A activity in India almost doubled from 6 per cent in 2007 to 11 per cent in 2008, according a BMR Advisory study.
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