Japan's CAC Corporation is picking up at least 51 per cent stake in Chennai-based IT services company Accel Frontline Ltd. The deal involves CAC Corporation picking part of the stake held by promoters of Accel Frontline and besides fresh infusion of capital. This will be followed by an open offer for another 26 per cent in the company.
According to VCCircle estimates, including the open offer, the deal would cost CAC Corporation around Rs 90-95 crore. After the deal, CAC will be a strategic partner in BSE-listed Accel Frontline with the promoters continuing to hold some stake.
CAC will buy 25.2 per cent of post issued share capital of the company from promoter entities - Accel Limited, Accel Systems Groups Inc and NR Panicker. This promoter group holds 65.65 per cent in Accel Frontline, nearly a third of which is pledged. This stake buy will cost CAC around Rs 34 crore. It will pick up another 18.48 per cent through preferential issue of fresh shares costing Rs 25 crore. These would give CAC 43.7 per cent stake in Accel Frontline.
Then it would make open offer for 26 per cent stake, which if done at Rs 45 per share would cost around Rs 35 crore. CAC expects to get at least 51 per cent stake in Accel Frontline.
Scrip of Accel Frontline was trading at Rs 35.5, up by 4.87 per cent, giving the company a market capitalisation of Rs 86 crore. The deal with CAC is done at a 33 per cent premium to the closing price of Rs 33.85 on Friday.
Tokyo Stock Exchange-listed CAC Corporation, established in 1966 as Japan’s first independent software development company, specialises in providing services to the banking and manufacturing sectors.
Accel Frontline promoter Panicker will remain as the executive chairman. The statement added that CAC and promoters of Accel Frontline will continue to provide long-term soft loans to enhance its long-term working capital.
"The formation of the JV partnership is expected to provide opportunities to both partners. While CAC will gain an immediate platform in the India IT services market, Accel Frontline will be able to access CAC's relationships in Japan to provide IT services with India as a service hub. Also, Accel Frontline will now be able to bid for providing IT infrastructure services for the major industrial corridors being built in India by leading Japanese companies," said the company in a statement.
Information technology and media firm Accel had acquired the 51 per cent stake held by British Telecom for Rs 49.9 crore to become a majority shareholder in Accel Frontline back in 2011.
(Edited by Joby Puthuparampil Johnson)