Essar to Acquire Controlling Stake in AGC

Chandrasekhar Atreya
31 May, 2010
New York City

Essar Group has agreed to acquire the entire stake of AGC Networks listed in India for $44.5 million or Rs 206.18 crore at Rs 245 per share. The deal is subject to regulatory requirements and completion of the mandatory offer.

[R]Essar Group has agreed to acquire the entire stake of AGC Networks listed in India for $44.5 million or Rs 206.18 crore at Rs 245 per share. The deal is subject to regulatory requirements and completion of the mandatory offer.[/R]

The Essar Group and Avaya, a global leader in enterprise communications systems, software and services, on Sunday said they had entered into a definitive agreement whereby the Essar Group would acquire the entire 59.13% stake in India-listed AGC Networks for $44.5 million or Rs 206.19 crore at Rs 245 a share.

The deal is subject to customary regulatory requirements and completion of the mandatory open offer.

The acquisition would be done through Essar Services Holdings Ltd and Essar Capital Finance Private Ltd. They will come out with an open mandatory open offer for an additional 20% stake in AGC Networks at a price to be determined as per the formula specified in the SEBI Takeover Regulations.

Essar Capital will make a public announcement today, Monday May 31. Assuming all shares are tendered in the open offer, its total value would be about Rs 78 crore.

The open offer process is expected to take between three and five months to complete.

AGC Networks is a converged communications solution provider focused on the Indian and Australian markets. It employs around 500 people and the current management is expected to continue spearheading the business post closing.

""It provides a great synergy with our systems integration business. With this acquisition, we will gain deep expertise in the ''enable'' block of experience management that we embarked on through our worldwide expansion drive. Now our customers will have the ability to have unified communication and experience management under one roof,"" S.K. Jha President SI Business Essar said.

Edelweiss Capital Ltd is the sole advisor to the transaction and is the manager to the open offer.

On Friday, AGC Networks’ stock on the BSE ended at Rs 278. However, at Rs 245 per share, Essar’s acquisition price is at about 12% discount to the current market price.

Aegis Limited, the BPO arm of the group will handle the acquisition after completion of formalities.

Apar Sengupta, Managing Director of Aegis Limited, said, ‘Essar in a short span has become a key player in the systems integration space and would benefit immensely from the depth and width of expertise AGC Networks has in this space. We have a definitive plan to grow this business as we aim for a bigger chunk of customer spends.’