Atul Karmarkar.Com» Mergers and Acquisitions

Sodexo acquires Radhakrishna Hospitality Services for Rs.520 crore

Atul Karmarkar — Wed, 11 Mar 2009 02:21:15 +0000

French global food & facilities management company Sodexo has acquired Radhakrishna Hospitality Services Group (RKHS) to become the leading Food and Facilities Management services company in India. The deal, valued at approximately $100 million (Rs.520 crore), was formalised yesterday and informed to the Paris Stock Exchange. The deal, however, does not include RKHS’s other businesses, including its retail arm or logistics & supply chain. BMR Advisors were the sole advisors to RKHS. With this acquisition, Sodexo has increased the distance between itself and its peers like Compass and Aramak.

Founded over 40 years ago, RKHS is a leader in the Food and Facilities Management services market in India, with 20,000 people across more than 1,000 sites. The company generated revenues of €70 million for the year ended March 31, 2008. Sodexo employs more than 355,000 employees on 30,600 sites in 80 countries. For the year ended August 31, 2008, Sodexo had revenues of €13.6 billion.

Mr.Raju Shete will become the non-executive chairman of the combined entity and continue to own and manage his food retail business under Radhakrishna Foodland separately.

Larsen & Toubro looking to acquire Satyam ?

Atul Karmarkar — Sun, 25 Jan 2009 01:14:00 +0000

In a bid to protect it’s portfolio investment, engineering giant Larsen and Toubro has decided to throw it’s hat into the ring to acquire the troubled Satyam Computer Services, and is looking to other institutional shareholders like LIC and ICICI Pru Life Insurance to support it’s revival plan.

According to the shareholding pattern in December, LIC holds 4.34 per cent in Satyam and ICICI Pru 2.87%. L&T had picked up a 4.48% stake from the open market in December and has seen a devastating erosion in it’s stake value after Raju’s confession. Not only that, it’s own share price has been hammered down recently.

L&T’s software arm L&T Infotech sees a lot of synergy with Satyam due to it’s presence in the ERP solutions business. Satyam is the 4th largest SAP integrator after Accenture, IBM and Capgemini. However, L&T could face some opposition from HCL Technologies, also said to be eyeing Satyam for the same reason.

On Friday, L&T picked up and additional 7.6% equity (5.8% on NSE and 1.8% on BSE) through an open market purchase, taking it’s stake in Satyam to almost 12%. The Satyam scrip closed the day at Rs.38.85. If L&T’s stake reaches the 15% mark, it will trigger an open offer for an additional 20% stake in Satyam as per Sebi’s takeover guidelines. The catch here is that in case of an open offer, the offer price will be based on the average price for the past six months, which will be pretty expensive for L&T.

L&T is apparently in discussions with the market regulator to relax this open offer clause given the extenuating circumstances. Let’s see what happens in the coming week.

Sun Pharma rejects Taro's offer of $15 a share

Atul Karmarkar — Wed, 07 Jan 2009 15:13:12 +0000

Sun Pharma and Taro Pharma still seem unable to resolve issues over their proposed partnership.

Taro has now proposed $15 per share in cash for a merger with Sun just a day before the out of court settlement deadline set by the Israel Supreme Court expires. Replying to the offer, Chairman and MD of Sun, Dilip Shanghvi said,

“Proposing a merger at an 82% premium to market is clearly an attempt to justify a delay to the court. The Taro board knows that $15 per share is way beyond what the company is worth.”

Sun feels Taro and its board are trying to protect the interest of Taro promoters – the Levitt and Moros families – and to avoid their obligation under the option agreement. Under the option agreement signed with the original merger agreement in May 2006, Taro promoters are bound to sell their shares to Sun Pharma at $7.75 apiece, even if the merger fails. In his letter, Shanghvi said the company would “not forgo the obligation of the Levitt family to transfer their shares to Sun Pharma for a never-before-attempted concept of a merger-referendum”.

Let’s see how this drama plays out before this weekend is out…

Yahoo acquires 30% stake in Call Ezee

Atul Karmarkar — Fri, 19 Dec 2008 15:38:21 +0000

Yahoo has taken a 30% stake in Indian company, Info Network Management Company, which provides phone directory search service, Call Ezee. However, the exact valuation is not yet known.

The Chennai based two year old company has a five member board, with promoters holding 70% after this dilution. According to founder TS Narayanaswamy, this investment by Yahoo would help them scale up operations and extend reach to 26 cities, from the present 14. They also plan to increase headcount up to ~2,000 people from the present 500 or so.

One of their major competitors in this space is Just Dial, which has been around for almost a decade now.

For Yahoo, this marks the third investment in an Indian company, Bharatmatrimony.com and Tyroo Media being the others, with investments of ~$20 million in the former and ~$9 million in the latter.

Mallya looking to divest 25% in Kingfisher

Atul Karmarkar — Tue, 18 Nov 2008 01:03:14 +0000

With hardly any company or sector being spared the aftershocks of the economic slowdown, Vijay Mallya’s Kingfisher Airlines appears to be the latest in the line, believed to be keen on a stake sale even as it flies deeper into ‘red’ territory with huge losses.

There is a proposal in the offing which seeks to allow foreign carriers to invest just less than 26% in their domestic counterparts, and Mallya seems to be eyeing British Airways, Singapore Airlines and Virgin Atlantic. However, with the stock markets turning an unkind eye, the market cap of the airline is currently around Rs.700 crore, and divesting 25% is only going to bring in close to Rs.175 crore, hardly enough to satiate Mallya. Ironically, this market cap could be quite close to the value of his IPL team, Royal Challengers.

These are worrying times ahead for Kingfisher, which is sitting on accumulated losses of ~ Rs.2,500 crore and has deferred proposed delivery of new aircraft. The oil companies and the Airports Authority of India are also not making it any easier, by demanding their pound of flesh, though Mallya will probably make staggered payments.

The newly formed alliance with Naresh Goyal’s Jet Airways is another sign of the turmoil the aviation industry is going through and it will be interesting to see how these one time rivals manage to tap into their combined synergies and get out of this mess, which ironically enough, is partly of their own making !

Weekly Market Wrap Up: Oct 27-Oct 31

Atul Karmarkar — Sat, 01 Nov 2008 01:15:53 +0000

SEBI eases norms for promoters to raise stakes

Google Settles Publishers’ Lawsuits Over Scanning of Books

MasterCard, Visa settle Discover suit for $2.75 billion

Suzlon scraps rights issue plan

Goldman Sachs to sack over 200 in India

Norway’s Telenor buys Unitech’s telecom firm

Two men who made nearly £2m through fake credit cards are jailed

Best Samvat in 18 years

Weekly Market Wrap-Up: Oct 13-Oct 17

Atul Karmarkar — Sat, 18 Oct 2008 00:30:45 +0000

Jet Airways ties up with Kingfisher Airlines

Employees at Lehman’s Mumbai back office unhappy with Nomura contracts

UK Government set to rescue four banks in £35 billion bailout plan

Credit card issuers increase interest rates

McKinsey sues Reliance Communications, seeks liquidation

Jet Airways sacks 1,900 employees

Hindalco rights issue 56% subscribed

Jet does a volte face, takes back all 1,900 employees

Google’s Q3 profits beat street estimates

Warren Buffett says now is the time to buy US stocks

Weekly Market Wrap-Up: Oct 06-Oct 10

Atul Karmarkar — Sat, 11 Oct 2008 00:40:16 +0000

Some of the attention grabbers this week:

Wells Fargo bids $12 billion for Wachovia, fends off Citi

TCS to sign passport deal

TCS acquires Citigroup Global Services for $505 million

Rupee touches lifetime low of 49.26 before recovering to Rs.48.47

G.M. and Chrysler Explore Merger

Has HCL wrapped up the Axon deal?

Atul Karmarkar — Fri, 03 Oct 2008 02:23:35 +0000

Well, it’s still early days, but the Axon board has recommended HCL’s offer to their shareholders in the absence of any competing bid from Infosys. The 60 hour timeframe given to Infosys expired and Axon said they would go ahead with HCL.

Infosys, on their part, have said they are still "evaluating all options".

Wait and watch for now !!

HCL goes head to head with Infosys over Axon buy

Atul Karmarkar — Sat, 27 Sep 2008 00:24:02 +0000

Barely weeks after Infosys announced it’s plans to acquire the Axon Group, HCL Technologies has decided to make a counter offer for around £441 million ($814 million).

HCL is offering 650 pence a share, or 8.3% more than Infosys’s 600 pence bid.

Infosys was quick to urge restraint, asking Axon shareholders not to take any action in haste, while the Axon board said they were pleased that HCL recognised the quality of their business.

HCL has also signed an inducement fee contract, which means that if the deal doesn’t go through, they would get 1% of the offered price from Axon.

HCL plans to fund this acquisition through debt financing, as opposed to Infosys, which has a large war chest and will go in for an all cash deal. HCL has a commitment of £400 million from Stanchart at an interest rate of 6.5%.

Update: Investors seem quite nervous about this deal and are of the opinion that balance sheets of both companies would be stretched. In keeping with that sentiment, share prices of both companies were hammered in the stock markets. There is also a strong possibility that Infosys may walk away from the deal rather than try and get into a bidding war.

Atul Karmarkar.Com» Mergers and Acquisitions

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