Enterprise applications firm Intelligroup Inc. has agreed to be acquired by Japanese information technology (IT) services company NTT Data Corp. for around $199 million (Rs927 crore) in an all-cash tender offer.
An NTT subsidiary will buy the Hyderabad-based company’s US-listed shares at $4.65 each, a 21.1% premium to Intelligroup’s average closing price over the three months to 11 June. Shares of Intelligroup, listed on the US’ over-the-counter (OTC) exchange, closed at $3.64 on 11 June.
The tender offer will begin within six business days and expire after 20 days, unless it is extended. The offer is conditioned on the tender of more than a majority of Intelligroup’s outstanding shares on a fully diluted basis and other conditions. The tender offer will be followed by a merger to acquire remaining shares at the same price.
NTT “is looking to get into India and the US markets...(and) brings us the scale and the financial muscle”, Vivek Gulati, chief executive of Intelligroup, said in a statement on Monday.
The management will remain the same, he added.
Intelligroup runs businesses in five verticals—manufacturing, high technology, life sciences, consumer packaged goods, and media and services. NTT’s operations are in manufacturing, insurance, financial services, healthcare and telecom sectors.
“There are areas of overlap and new areas of growth for both companies,” said Gulati.
The transaction was unanimously approved by the boards of both Intelligroup and NTT. Intelligroup’s board will recommend to its stockholders to tender their shares in the offer.
SB Asia Infrastructure Fund Lp and Venture Tech Assets Pvt. Ltd, which collectively hold 62.9% of Intelligroup’s outstanding common stock, have agreed to tender their shares into the offer.
“NTT and other Japanese companies like Fujitsu have little or no presence in the Indian market and have been scouting very aggressively for acquisitions to expand their footprint here,” said Diptarup Chakraborty, principal analyst at technology research firm Gartner Inc. “Intelligroup being one of the top five BPO (business process outsourcing) providers is a very good fit for the company (NTT).”
Chandranshu Singh, analyst at another IT researcher, Ovum, said the deal will give Intelligroup access to other delivery mechanisms such as cloud computing, in which software or hardware can be rented over the Internet.
Intelligroup provides primarily SAP, Oracle and Microsoft applications to companies in the US, the UK, Denmark, Japan, India and West Asia, which complement NTT’s services business and its customer base for such services.
In fiscal 2009, Intelligroup had revenue of $125 million. It employs 2,600 people globally, of which 1,800 are in its Hyderabad, Bangalore and Mumbai delivery centres.