Listed engineering and software services company Cyient Ltd has signed a definitive agreement to acquire the 26% stake it did not already own in Cyient DLM Pvt. Ltd (formerly Rangsons Electronics Pvt. Ltd), its electronics system design and manufacturing unit.
Hyderabad-based Cyient (formerly Infotech Enterprises) will pay Rs 42.5 crore ($5.95 million at current exchange rates) to buy out the balance stake from the NR Group and take full control of the unit, the company informed the stock exchanges on Tuesday.
The cash transaction values Cyient DLM’s equity at Rs 163.5 crore (nearly $23 million), VCCircle estimates show.
“By acquiring the balance 26% stake, Cyient and its nominees will get 100% ownership in Cyient DLM…and (convert) partly-owned subsidiary to wholly-owned subsidiary. Closing is expected in 30 days and is subject to customary closing conditions,” Cyient said in its stock-exchange filing.
Cyient, led by executive chairman BVR Mohan Reddy, had announced in January 2015 that it would acquire 74% stake in Mysuru-headquartered Rangsons Electronics from the NR Group. The stake purchase concluded the following month.
The acquisition is part of Cyient's S3 (services, systems and solutions) strategy to expand into high-technology and high-value, design-led systems and solutions.
Shares of Cyient ended at Rs 591.45 apiece on the BSE on Tuesday, down 1.68% from the previous close. The stock has traded at a high of Rs 887 and low of Rs 577.30 over the past year, stock-exchange data showed.
The company counts UK’s First State Investments ICVC, Singapore-based India-dedicated fund Amansa Holdings Pvt. Ltd and US investment banking giant Goldman Sachs among its institutional investors. Some of its past investors include private equity firms ChrysCapital and Carlyle Group.
Cyient provides solutions including product development and life-cycle support. The company is a qualified supplier to global OEM's across defence and aerospace, medical, automotive, telecommunications, and industrial segments. The company has struck several acquisitions in recent years.
Cyient had announced in September 2017 that it would acquire Connecticut-based B&F Design Inc. in a cash deal via its step-down subsidiary Cyient Defense Services Inc.
It had previously acquired, among other deals, US-based end-to-end IT services management solutions provider Softential Inc and data sciences startup Invati Insights. Both acquisitions took place in early-2014.