iGate board nod for merger of subsidiary

11th April 2006: The board of directors of iGate Global Solutions today granted its in-principal approval to merge the wholly-owned subsidiary, iGate Technology Services, with the company and will be initiating necessary steps in this regard.

According to a release issued by iGate to the BSE today, the company is also planning to move its existing operations in China from Wuxi to Dalian to leverage on the technology talent pool offered by Dalian.

"Dalian is one of the main cities in China, which is attracting large amount of foreign investment and is a base to several IT companies particularly focusing on the Japanese market. The company plans to set up its new facility in Dalian and wind up the existing facility in Wuxi", the release added.

Birla to pay Rs 4406cr for 48.14% Idea stake

11th April 2006: The Aditya Birla group today announced that it would acquire its join venture partner Tata group’s entire 48.14% stake in Idea Cellular for Rs 4,406 crore to scale up its holding to 98.3%. The former promoter of Aircel, C Sivasankaran, will continue to hold 1.7% in Idea, which has 6 million customers in 11 telecom circles.

The Birla group also announced that it intended to sell 33% stake after the acquisition to financial institutions on the same terms offered to the Tatas. This sale will bring down the group’s stake to over 65%.

The announcement of the proposed purchase of the shareholding of the Tata group, which was looking for the “right price” to pull out of Idea, followed an offer from Malaysian telecom company Maxis. Having been informed by the Tatas about the Maxis offer, the Birla group decided to match it. The Birla group as a co-promoter reserved the first right of refusal.

Aditya Birla Nuvo, the recently created company entrusted with the task of generating growth in new businesses, including telecom, will purchase a 15% stake, while Birla TMT Holdings will buy the balance 33.14% stake. All the Birla entities will pay the same price — Rs 40.51 a share — for acquiring the Tata stake.

At this price, the valuation of Idea stood at Rs 9,151 crore. Taking the company’s debt of Rs 3,500 crore into account, the enterprise value became Rs 12,651crore. The company has an equity capital of Rs 2,259 crore.

The acquisition price is substantially higher than Rs 17.5 a share, the price the Birlas and the Tatas paid to buy out Cingular Telecom’s stake a few months ago. After the acquisition, the Tata group’s holding went up to 48.14% while that of the Birlas’ to 50.16%.

3i Infotech acquires Datacons for Rs 40 crore

5th April 2006: IT services and solutions provider 3i Infotech has acquired Bangalore-based Datacons for Rs 40 crore in a bid to strengthen its banking and financial services product portfolio. Datacons offers products in banking, financial services and insurance (BFSI) and retail & distribution segments.

3i Infotech officials refused to comment on the matter. 3i had been scouting for acquisitions in the BFSI space to fill the gap in its product space to penetrate the banking industry as well as the capital markets sector. “3i had been looking at acquiring companies in the range of Rs 30-40 crore annual revenues.

It had also been evaluating to buy three more companies, two of which were based outside India,” sources familiar with the deal said. 3i Infotech offers solutions in banking, insurance, manufacturing, contracting, retail and distribution and government verticals.

However, the company is bullish on the BFSI segment, and has also re-branded its banking solutions under the ‘Kastle’ brand in a bid to penetrate the market. This is the fourth acquisition by 3i Infotech since September last year.

The company closed the last fiscal with three acquisitions. In September ‘05, it bought US-based IT solutions company Innovative Business Solutions for $3.6m. In November last year, 3i bought out FormulaWare, a US-based software company which provides enterprise resource planning (ERP) solution for the process manufacturing industry.

During the same period, 3i announced the acquisition of SDG Software Technologies, a Hyderabad-based software products company with annual revenues of Rs 10 crore. 3i Infotech posted revenues of Rs 292 crore during FY05, and is looking at 40-45% growth in FY06.