Majesco to sell US arm to PE firm Thoma Bravo for Rs 4,455 cr; stk soars 5%

Majesco US has decided to sell its company to a private equity, Thoma Bravo, LP at $13.1/share, valuing the company at $594 million. This offer price is at a 77% premium to Majesco US' last close

Shares of Majesco were locked in the 5 per cent upper circuit band at Rs 401.15, also its 52-week high, on the BSE on Tuesday after the board of directors approved to sell its US subsidiary to private equity firm Thoma Bravo. Majesco India holds a 74.07 per cent stake in the US entity, Majesco US.

“Majesco, subsidiary of Majesco Limited, has signed a definitive agreement to be acquired by Thoma Bravo, L.P., a leading private equity firm focused on the software and technology-enabled services sectors, in a transaction valuing the company at $594 million. Following the closing of the transaction, Majesco will operate as a privately-held company,” the company said in a press release.

Majesco US has decided to sell its company to a private equity, Thoma Bravo, LP at $13.1/share, valuing the company at $594 million (Rs 4,455 crore). This offer price is at a 77 per cent premium to Majesco US' last close price.

“Hence, based on the stake, Majesco India will receive cash of $420 million (Rs 3,154 crore). Assuming a capital gains tax, the company would receive cash of Rs 2,555 crore. This, coupled with a cash of Rs 26 crore on the company's balance sheet the total cash with the firm would be Rs 2,581 crore or Rs 852/share (i.e is 224 per cent above the last closing price of Rs 380/share),” ICICI Securities said in a note.

Majesco India intends to distribute entire proceeds via dividend or buyback as expeditiously as possible. The transaction is expected to be completed by end of 2020 subject to regulatory approvals.

Meanwhile, the stock of Mastek also surged up to 20 per cent to Rs 508.25, also its 52-week high, in the intra-day trade on the BSE. At 12:05 pm, the stock was trading 16 per cent higher at Rs 493, as compared to 1.2 per cent rise in the S&P BSE Sensex.

Mastek holds around 6.5 per cent stake in Majesco US. This transaction will value its stake at Rs 198 crore. This transaction will boost the current valuation of Mastek by 10 per cent, the brokerage firm said.