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Datamatics hits the roof on buyback arrangement with Cignex

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Datamatics Global Services hit an upper circuit of 10% at Rs 80.95 after the company said its wholly-owned Mauritius-based subsidiary has agreed to divest its stake in Cignex Datamatics Inc. through a stock redemption arrangement.

The proposed divestment will be effected through a stock redemption agreement, under which Cignex will buyback the entire 62.51% stake held by Datamatics Global Technologies Limited, Mauritius (DGTL) in Cignex for an aggregate price of $16.57 million of which $7.97 million will be paid upfront to DGTL. The balance amount will be paid-out within the next 3 (three) years. With this, the earlier deal with Relevance Lab stands terminated.

In December 2019, Datamatics Global Services had said that it had strategically divested its stake in Cignex as it was acquired by a Relevance Lab, a Singapore headquartered IT Services company through a share-swap arrangement.

Cignex Datamatics, is a US-headquartered IT Services firm offering open source and automation services. It contributed 16.25% of the total turnover of Datamatics Global Services for the year ended 31 March 2020.

Speaking on occasion, Rahul Kanodia, CEO and vice-chairman, Datamatics, said: We have worked on the structure and commercial terms to arrive at the proposed arrangement. This is an all cash deal and we are confident that it is beneficial for our company and its shareholders.

He further added, It will free up the management bandwidth, bring a sharper focus, and provide funds to invest in our digital solution strategy which is central to the business.

The deal is subject to approval by Datamatics shareholders.

Datamatics Global Services is a provider of information technology services, business process management, engineering services, and big data & analytics, all powered by artificial intelligence.

The company's consolidated net profit fell 22.7% to Rs 15.42 crore on a 3.7% fall in net sales to Rs 285.62 crore in Q2 FY21 over Q2 FY20.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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First Published: Tue, November 24 2020. 13:50 IST