Mumbai: The business process outsourcing (BPO) unit of Essar Group, Aegis Ltd, has acquired a majority stake in AGC Networks Ltd, the Bombay Stock Exchange (BSE)-listed Indian arm of US-based enterprise networking solutions firm Avaya Inc., for $44.5 million (Rs206.93 crore).
Aegis will buy Avaya’s 59.13% stake in AGC for Rs245 a share, a 12% discount to AGC’s Friday closing price of Rs278.45. This will be the 14th acquisition by Aegis and the second this fiscal year.
AGC, earlier known as Avaya Global Connect, helps large enterprises design and implement solutions for linking multiple campuses across different geographies. Such unified communication channels are an integral part of setting up offshore operations for cost-effective management of business processes, an area that Aegis specializes in.
Graphic: Yogesh Kumar/Mint
The acquisition will help Aegis expand its services portfolio, Aegis chief executive officer Aparup Sengupta said on Sunday.
Besides the Indian arm of AGC, Aegis will also acquire the Australian and New Zealand operations of the firm. About 500 employees of AGC will become part of Aegis. For the six months ended 31 March, AGC had a revenue of Rs276.8 crore and a profit of Rs18.7 crore.
AGC shares touched a 52-week high of Rs310.30 in intraday trading on on 12 May, when they rose by the maximum permitted one-day increase of 20%. Trading volume on the day was 1,748,722 compared with its five-day average of 46,119.
Under the takeover guidelines of the Securities and Exchange Board of India (Sebi), the market regulator, Aegis will make an open offer for buying 20% more of AGC from shareholders. The acquisition will be done through Essar Services Holdings Ltd. Edelweiss Capital Ltd was the adviser for the transaction and will also be the manager of the open offer.
Although the acquisition is at a significant discount to the market price, Aegis’ Sengupta said the open offer price would be calculated based on Sebi guidelines and would be higher so that shareholders would have an incentive to sell. The company expects the open offer size to be in the range of Rs78 crore.
On 19 May, Aegis acquired the Texas-based customer service centre operation of US financial cervices firm Sallie Mae for an undisclosed sum. As part of that transaction, Aegis had also taken on board about 350 employees in Texas.
Aegis has around 40,000 employees at present and is among the largest Indian BPOs. While the privately held firm does not disclose its revenue, Sengupta said recently that he hopes to make Aeigs a $1 billion entity within the next 12-18 months.
Earlier this month, he told The Hindu Business Line newspaper that Aegis’ plans for an initial public offering had been put on hold for now.