Accel Frontline Ltd will soon become a subsidiary of British Telecom. The Chennai-based IT company is 42 per cent owned by Frontline Technologies Corporation (FTC) of Singapore, 30 per cent by the Indian promoter Accel Ltd, and by Indian public.
Today, it was announced in the Singapore stock exchange that British Telecom, through BT Singapore Pte Ltd, would buy out FTC. Concurrently, FTC is also buying 9 per cent in Accel Frontline from the Indian promoter. When these two transactions are complete, Accel Frontline will be 51 per cent owned by the $18-billion British Telecom.
The Rs 185-crore Accel Frontline provides a range of IT services, including infrastructure management, ERP consulting, banking solutions and networking. It also runs a BPO. The company expects a turnover of Rs 270 crore in the current year.
‘Open offer’
This is then a case of ‘indirect acquisition’ of an Indian company through an overseas transaction. Normally, this would trigger an ‘open offer’ to the public, experts say.
(A recent example is that of Sparsh BPO Services. IGSPL, a joint venture of HDFC and Barclays Bank, had a 51 per cent stake in Sparsh. When HDFC and Barclays Bank sold their stakes in IGSPL to SKR BPO, the transaction triggered an open offer.)
Experts note that this is a clear case of change in ownership and BT will have to come out with an open offer, though it could seek an exemption if it is able to provide grounds for that.
On the NSE, Accel Frontline’s shares closed at Rs 111.65, higher by Rs 10.15 (10 per cent) over the previous close.
Asked for a comment on the development, Mr N.R. Panicker, Managing Director and CEO of Accel Frontline, who owns Accel Ltd, said: “this development will bring excellent business opportunities to Accel Frontline. This is the biggest milestone in the (16-year) history of the company and will bring benefits to all stakeholders.†Source: thehindubusinessline
