HP won`t make open offer for MphasiS shares

In a notification to the Bombay Stock Exchange (BSE), EDS said, "The proposed merger is in accordance with the laws of Delaware, US, and, therefore, even if the proposed merger is consummated, HP and EDS need not make an open offer for the shares of MphasiS under the provisions of the Securities and Exchange Board of India (substantial acquisition of shares and takeovers) Regulations, 1997."

Following the announcement, the MphasiS stock, which rose during the last one week, fell 2 per cent today to close at Rs 234.25. Its shareholders were expecting to sell the shares at a premium when EDS acquired the company, anticipating an open offer for at least 20 per cent stake of the target company in the event of a change in the management control. No open offer, however, is required in case of a merger or amalgamation.

Meanwhile, there are talks that HP would soon work to integrate MphasiS by delisting it from the Indian bourses. Besides, the integration of the company with HP may result in a lay off. EDS has over 26,000 employees in India.

After acquiring MphasiS in June 2006, EDS has twice tried to increase its stake in the company unsuccessfully. Currently, the company holds about 60 per cent stake in the company, while mutual funds, FIIs and financial institutions/banks hold 19 per cent.

When HP announced the acquisition of EDS earlier this month, the company had stated that it intended to make EDS a `separate business group', which hinted the deal as more merger than an acquisition.

In case of a merger, the company might go for a stock swap, which would not require it to go for an open offer for the subsidiary of the target company, said an analyst who wished not to be named.