UK-based back office services provider Xchanging has agreed to acquire 75% of the fully diluted share capital of Cambridge Solutions (formerly Scandent Solutions) for 83 million pounds ($147.3 million or Rs 690.4 crore) from a group of its major shareholders. The buyer will make an open offer for 20% of the shares from public market.
The deal values Cambridge at $196.4 million, which is much less than what had been talked about earlier. A few months ago, there were of Cambridge being sold at an enterprise value of $250 million, and last year at $400 million. The company recorded revenues of Rs 1,236 crore in 2007-08.
The promoters hold about 60% stake. The three major promoters NRIs Chanderia family, former Pepsico chairman Chris Sinclair and Cambridge vice-chairman Satyan Patel together hold 30%, while Ramesh Vangal, the largest individual shareholder, holds 18% and ex-McKinsey CEO Rajat Gupta is also another major shareholder.
Cambridge Solutions, with approximately 4,500 employees, is an international BPO and IT services provider, and is listed on the Bombay, National, Madras and Ahmedabad stock exchanges in India.The company's share prices have been hititng upper circuit for the last few days, in anticipation of the deal.
Once the open offer is complete, Xchanging's maximum stake in Cambridge will be 75%. So any Cambridge Solutions Shares acquired under the open offer will reduce the number of Cambridge Solutions Shares to be acquired from the major shareholders, as will any reduction in the fully diluted share capital of Cambridge Solutions in the period to completion, the release said. After completion of the deal, Xchanging will own 75% of the fully diluted share capital of Cambridge Solutions.
The consideration for the acquisition will be approximately 83 million pounds which is in part stock and part cash. The cash component includes Rs 371.2 crore (equivalent to 45 million pounds at current rates) and the issue of 15,249,998 New Xchanging Shares. The New Xchanging Shares amount to 7% of the company's current issued ordinary share capital.
Press Trust of India reports, quoting sources, that the acquisition would be at Rs 81 for each share of Cambridge. This would be a premium of 36.3 per cent over the company's closing price of Rs 59.40 on Friday.
"The acquisition is consistent with our strategic objectives and the dynamics of the BPO market, and represents the next step in Xchanging's development, delivering a number of unique benefits.," the statement from Xchanging said.
Citigroup Global Markets Ltd acted as the exclusive financial adviser and joint broker to Xchanging. UBS Ltd acted as joint broker to Xchanging.