NEW DELHI / MUMBAI: News Corp owned Hughes Network Systems (HNS), which holds a 55 per cent controlling stake in the India-registered Hughes Software Systems Ltd (HSS), announced today that it had sold its entire holdings to Flextronics International Asia Pacific Ltd . The all-cash deal was worth $ 226 million.
The HSS stock reacted favorably to the development and closed the day at Rs 531.10 on the Bombay Stock Exchange, up from the previous closing of Rs 520. On the National Stock Exchange, the scrip ended the day at Rs 531.50, up from yesterday's closing rate of Rs 519.
Announcing the deal in Delhi at a press conference today, Flextronics' US-based president (design, services), Ash Bhardwaj, said that the acquisition would add much value to the company's activities, while adding that the management and the brand name of HSS would remain unchanged. Flextronics is a Singapore-based electronics manufacturing services (EMS) provider.
However, Flextronics would have three nominees of it on the HSS board, while there would be three independent directors. HSS will have six nominees of it on the board of directors.
In a notice put up on the Bombay Stock Exchange today, HSS stated it is in receipt of a letter dated 8 June from HNS Mauritius Holdings and HNS, the promoters of HSS, informing of they having executed share purchase agreement with Flextronics International Asia Pacific Ltd. HSS said it had agreed to sell its entire shareholding (representing 54.96 per cent of the company's total issued and paid up equity share capital) to Flextronics at Rs 547 per equity share subject to fulfilment of certain conditions that include compliance with public offer requirements under market regulator Sebi's diktat.
Some of HSS's bigger clients include big global telecom companies. HSS reported revenue of Rs 3,604 million and net income of Rs 769 million in its fiscal year ended 31 March, 2004. revenues grew approximately 63 per cent in fiscal 2004 and are projected to grow about 25 per cent in fiscal 2005.
Flextronics hopes to close the approximately Rs 10.2 billion deal latest by October 2004, subject to regulatory approval, which would also include making an open offer to the public, having a shareholding in the company, at the same price at which it bought the 55 per cent shareholding from HNS.
A representative of DSP-Merrill Lynch, which helped in structuring the deal, said on the sidelines of the press conference that it does not expect very many people to come forward and sell out the shares of HSS , held by them, during an open offer that has to be made by Flextronics.
Hughes Software Systems , a Hughes Electronics Corporation subsidiary (controlled by Rupert Murdoch's companies), is an end-to-end communication solutions provider for more than 200 customers worldwide, in the telecom infrastructure, communication service provider, and business process outsourcing sectors. A specialist in convergent network solutions, HSS offers products (licensable technologies) and strategic outsourcing services to its customers for mobile, fixed or IP networks. A global leader in protocol signaling solutions, HSS products and services help build comprehensive solutions for Voice over Packet and Broadband Wireless data. Its outsourcing services span the entire software lifecycle, from maintaining and enhancing legacy systems to product design, development, and testing services.
Assessed at SEI-CMMI Level 5, HSS has been an ISO 9001 company since 1996. One of the Best Employers in India, (BT- Hewitt study), HSS has development centers at Gurgaon, and Bangalore , in India, and at Nuremberg in Germany.
The company has sales and support operations in 10 international locations and has more than 2300 employees worldwide.
