Accel Frontline Ltd. (AFL) said the current promoters of the company and Japan's independent software development company CAC Corporation have signed definitive agreements to induct CAC as a strategic partner in Accel Frontline.
Under the terms of the agreement, CAC will acquire a minimum of 51 percent equity shareholding in AFL through purchase of equity shares from the promoters, subscription of new equity shares of the company and purchase of equity shares from public shareholders by the mandatory open offer for up to 26 percent of the company's equity capital at a price of Rs.45 apiece.
The company will be run as a joint venture between CAC and current promoters of AFL who will continue to be significant owners of the company. N.R. Panicker will remain as the Executive Chairman of the company, it said.
As a part of the growth plans for AFL, CAL will pump in fresh equity in the company to expand its capital base. In addition, both CAC and the current promoters of AFL will provide long-term soft loans to the company to enhance AFL's long-term working capital.
The transaction is subject to statutory approvals from regulatory authorities in Japan and India.
The formation of the joint venture partnership is expected to provide major opportunities to both partners. While CAC will gain an immediate platform in the fast growing Indian IT services market, Accel Frontline will be able to access CAC's relationships in Japan to provide IT services with India as a service hub. Also, Accel Frontline will now be able to keenly bid for providing IT infrastructure services for the major industrial corridors being built in India by leading Japanese companies.
Commenting on the development, CAC President and CEO Akihiko Sako said, As part of our globalization plan, we are looking at India, not only as a market, but also as an outsourcing destination for software, which can help our customers in different parts of the world. So this JV partnership will achieve the twin objectives of serving our Japanese clients operating in India and leveraging Accel's capability of software development services to serve our global customers."
Accel Frontline Chairman N.R. Panicker said, "This is an important milestone for Accel Frontline coming two years after the promoters had bought back a controlling stake in the company from British Telecom in August 2011. We have been looking at various avenues to grow our international business more rapidly. The joint venture with CAC Corporation will help us to achieve this goal. CAC Corporation's prominent presence in Japan and their client base in the US, the UK and other countries will give us cross-selling opportunities with our service offerings."
At the BSE, Accel Frontline shares are currently trading at Rs.35.50, up 4.87 percent from the previous close.
by RTT Staff Writer
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