Varkey group buys 12%, to launch open offer for more.
The $2.5 billion Dubai-based Varkey group company, Gems Education, will buy 2.62 million shares or 12 per cent equity share in education company Everonn Education for around Rs 138 crore. It has agreed to pay Rs 528 per share — a 43.8 per cent premium to Everonn’s closing price of Rs 367.15 per share. The company’s stock price closed five per cent higher on the Bombay Stock Exchange on Tuesday.
The company’s stock hit the upper circuit on the Indian bourses on Tuesday but only a few weeks back had plunged 20 per cent after the arrest on a bribery and tax evasion charge of its managing director, P Kishore, and resignation of its chairman J J Irani. Kishore was arrested for concealed taxable income to the tune of Rs 116 crore.
| VARKEY GROUP TO ACQUIRE 12% | |
| STAKE IN EVERONN FOR Rs 138 cr | |
| * The Varkey group, which is in the education business with 10,000 faculty members, has a presence across 140 countries | |
| * Everonn was incorporated in 2000 and became a leading education player in a decade | |
| SHAREHOLDING PATTERN (In %) | |
| SKIL Infrastructure | 20.83 |
| P Kishore | 8.52 |
| P K Padmanabhan | 6.10 |
| Jayalakshmi Padmanabhan | 3.40 |
| Susha John | 2.19 |
| P Sarvotham | 0.65 |
| BAIL HEARING ADJOURNED | |
| The Madras High Court on Tuesday adjourned the hearing on a bail plea by Everonn Education managing director P Kishore in connection with a bribery case filed against him and others by the CBI. Justice G Rajasuria adjourned the matter after the CBI sought two weeks to file the analysis report of voice samples from a telephonic conversation between income tax official A Ravindar, Kishore and Uttam Chand Bohra, a Chennai resident, from a forensic laboratory in Hyderabad. | |
According to the CBI, after the detection of taxable income, Kishore contacted the additional commissioner through a chartered accountant and requested he suppress Rs 60 crore of the total taxable income.
The Varkey group, which is in the education business with a presence across 140 countries, will be issued these shares through a preferential allotment, after which it will launch an open offer to acquire another 22-23 per cent stake in the company, taking its total stake to 34-35 per cent.
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After the preferential allotment, P Kishore and Associates’ shareholding in the company will come down to 18.89 per cent from the current 21.44 per cent. SKIL Infrastructure’s shareholding of 20.83 per cent will come down to 18.35 per cent.
According to Sebi takeover guidelines, an ‘open offer’ gets triggered mainly in two situations: when an acquirer acquires 15 per cent or more in a listed company, or when there is a change of management in a listed company. “In the case of Everonn-Varkey, even though the percentage stake acquired is less than the prescribed 15 per cent level, the open offer gets triggered as this deal results in a change in management,” said Jagannadham Thunuguntla, strategist & head of research, SMC Global Securities.
The board has also approved a tripartite MoU between Everonn, the Varkey group and the Nikhil Gandhi-owned SKIL Infrastructure to this effect. SKIL, being a co-promoter of Everonn, is party to the MoU. Headed by NRI entrepreneur Sunny Varkey, Gems Education will join Everonn, with the latter’s board approving a preferential allotment of 12 per cent stake.
Nikhil Gandhi, the non-executive director at Everonn, meanwhile, maintained that Kishore would not return to the company. “The Varkey group wants to buy close to 35 per cent in the company. I am not part of the day to day running of the company. The management control will be with the Varkey group. However, the existing team will continue to work with the new management. Kishore will not return to the company as he has to deal with the crisis,” he told Business Standard. Kishore holds 8.52 per cent stake in the company.
Everonn was incorporated in 2000 and became a leading education player in a decade. The Blackstone Group invested $42 million in Everonn in 2009.
The increasing penetration of satellite-enabled courses in colleges and schools, classroom software in schools and government contracts enabled it to scale up its education business rapidly. In 2010-11, the company added 1,455 schools against 1,017 during 2009-10 and 1,920 colleges against 1,567 in 2009-10. The number of government schools it was working with till the end of 2010-11 was 6,628 against 5,862 the year before. During the year ended March 2011, revenue was Rs 301.6 crore and net profit was Rs 72.9 crore. During the quarter ended June, revenue growth was 45 per cent at Rs 98.2 crore and net profit was Rs 9.7 crore.