Genpact, the country’s largest BPO, will purchase shares worth up to $300 million through a modified ‘Dutch auction’ tender offer that it expects to start from Thursday, the company disclosed.
Dutch auction is a public offering auction structure in which the price of the offering is set after taking in all bids and determining the highest price at which the total offering can be sold.
Under the terms of the tender offer, Genpact's shareholders will have the opportunity to tender some or all of their shares at a price per share of not less than $16.50 per share and not greater than $18 per share.
“Based on the number of shares tendered and the prices specified by the tendering shareholders, Genpact will determine the lowest per share price within the range that will enable it to purchase $300 million in shares, or such lower amount depending on the number of shares that are properly tendered and not properly withdrawn,” said the company.
All shares accepted in the tender offer will be purchased at the same price, regardless of whether a shareholder tendered such shares at a lower price within the range. At the minimum price of $16.50 per share, Genpact would repurchase a maximum of 18,181,818 shares, or approximately 8 per cent of its outstanding common shares as of February 28, 2014.
Genpact intends to finance the share repurchase from available cash and cash equivalents and borrowings under its existing credit facility.
The tender offer will expire at midnight, New York City time, at the end of the day on April 2, 2014, unless extended or withdrawn, noted the company.
Genpact's directors and executive officers have said they do not intend to tender any of their shares in the tender offer. In addition, affiliates of Bain Capital Investors, LLC (which currently own approximately 25 per cent of Genpact's outstanding shares) has said it does not intend to participate in the tender offer.
Genpact generated $311.6 million in cash from operations in 2013, up from $310.7 million of cash a year earlier, which included about $45 million from an upfront client payment. It had about $571.3 million in cash and cash equivalents as of December 31, 2013.
(Edited by Joby Puthuparampil Johnson)