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Tejas Networks shares rally as Tata Sons looks to acquire controlling stake

Panatone Finvest Ltd., a unit of Tata Sons Pvt., will acquire a controlling stake in Tejas Networks Ltd.

The Tata company has signed an agreement to acquire 43.35% of Tejas for Rs 1,850 crore, triggering an open offer by Tata Sons to acquire shares of the telecom and broadband network products maker from the public, according to an exchange filing.

  • As part of the agreement, Tejas will make a preferential allotment of 1.94 crore equity shares at Rs 258 per share aggregating to Rs 500 crore to Panatone.
  • There will also be another preferential allotment of 3.68 crore warrants, each carrying a right to subscribe to one equity share at an exercise price of Rs 258 per equity share aggregating to Rs 950 crore.
  • Panatone will also take another 1.55 crore warrants, which can be converted into equal number of shares in Tejas between 12th and 18th month of the allotment date.
  • Panatone will also make a mandatory open offer for as much as 26% of Tejas shares at Rs 258 apiece, in accordance with SEBI Takeover Regulations.

The company said it would utilise the proceeds raised from the preferential allotment to invest organically and inorganically in the research and development, sales and marketing, people, infrastructure and to enhance its manufacturing and operational capabilities to cater to this large market opportunity, and for other general corporate purpose.

Shares of Tejas Networks jumped as much 5.69% to their highest since November 2018. The stock has climbed 5% in the last six trading sessions, says BloombergQuint.

Panatone and other certain companies of the Tata group would make a Public Announcement to acquire up to 4.03 crore equity shares of Tejas Networks representing 26.00% of the emerging voting capital in accordance with SEBI Takeover Regulations.

Tejas Networks sees a very large opportunity in the telecom sector both in India and global markets with the new cycle of investments in 5G and fiber-based broadband rollouts. Tejas Networks will utilize the proceeds raised from the preferential allotment to invest organically and inorganically in the research & development, sales and marketing, people, infrastructure and to enhance its manufacturing and operational capabilities to cater to this large market opportunity, and for other general corporate purpose.

Speaking on this transaction, Mr. Saurabh Agrawal, Executive Director of Tata Sons Private Limited, said “We are excited to partner with Tejas Networks, India’s leading telecom and network company with a strong DNA of R&D. We look forward to working with the highly experienced management team of Tejas Networks and creating a full stack of globally competitive wireline and wireless products.”

Mr. V Balakrishnan, Chairman of Tejas Networks, said “We are delighted about our association with the Tata group, which has a long history of building highly successful global businesses of scale. This association provides us the necessary financial resources, global relationships and strong ecosystem to innovate and scale our business.”

Mr. Sanjay Nayak, CEO and Managing Director at Tejas Networks said “We are privileged to be part of the Tata group, which has a rich legacy as India’s most visible and trusted business brand. Tejas Networks was started with a vision of creating a top-tier global telecom equipment company from India. The association with Tata group will accelerate the realisation of this vision and enable us to address the large market opportunity available to us to build a financially strong global company, backed by a trusted brand. I am fully committed to making this a success and am excited about the next phase of our journey.”

Sanjay Nayak shall continue as Managing Director and Chief Executive Officer to lead Tejas Networks along with the existing management team through the next phase of growth.

The preferential allotment of the equity shares and warrants has been approved by the Board of Directors of Tejas Networks and the transactions are subject to shareholders’ approval and other customary closing conditions and approvals.

Kotak Mahindra Capital Company Limited is acting as the manager to the open offer and Khaitan & Co is acting as the legal advisor to the transaction.
CT Bureau

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