A Tata Sons subsidiary is buying a controlling stake in Bengaluru-based telecom products major Tejas Networks to gain access to crucial technology for 5G and 4G telecom gear.
What’s the deal? Panatone Finvest, a unit of Tata Sons, has signed an agreement to acquire a 43.35% stake in Tejas Networks for Rs 1,850 crore. This includes preferential allotments of:
■ 1.94 crore equity shares at Rs 258 per share amounting to Rs 500 crore.
■ 3.68 crore warrants, each carrying a right to subscribe to one equity share at an exercise price of Rs 258 per equity share amounting to Rs 950 crore, which may be exercised by Panatone before the end of a 11-month period starting from the allotment date of warrants.
■ 1.55 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 400 crorewhich may be exercised by Panatone during the period starting from a year after the allotment date of warrants and ending before 18 months before the allotment date.
Panatone Finvest will also acquire up to 13 lakh equity shares from certain Tejas Networks management personnel at not more than Rs 258 per share, aggregating to Rs 34 crore.
This transaction triggered a mandatory open offer for the Tata Sons unit to acquire up to 4.03 crore equity shares of Tejas Networks, representing 26% of the emerging voting capital in accordance with SEBI Takeover Regulations.
Following this deal, Tejas Networks hit the upper circuit after it rose 4.99% to Rs 246. The upper circuit limit is the highest price a stock can reach on a particular day.
What does it do? Tejas Networks designs, develops and sells high-performance and cost-competitive networking products to telecom service providers, internet service providers, utility companies, defence companies and government entities.
The company plans to use the proceeds from the preferential allotment to invest organically and inorganically in areas such as research & development, sales and marketing, people and infrastructure, and to improve its manufacturing and operational capabilities.
Tejas Networks MD and CEO Sanjay Nayak will continue to lead the company along with the existing management team.
Tata’s startup acquisitions: In recent months, Tata’s digital unit has also struck several startup deals as it prepares its super app play to take on the likes of Amazon, Reliance Industries and Walmart-owned Flipkart. These include:
■ A 64% stake purchase in online grocer BigBasket,
■ A 51-60% stake purchase in e-pharmacy 1mg,
■ A $75 million investment in health and fitness startup CureFit, whose co-founder Mukesh Bansal also joined Tata Digital as president.
