Accel Frontline was locked at 5% circuit filter at Rs 35.50 at 11:49 IST on BSE after the company said that CAC Corporation, Japan would acquire majority stake in the company.
The announcement was made during market hours today, 9 December 2013.
Meanwhile, the BSE Sensex was up 336.35 points or 1.6% at 21,332.88
On BSE, 320 shares were traded in the counter with pending buy orders of 1.22 lakh shares at upper circuit. The scrip had an average daily volume of 9,114 shares in the past one quarter.
The stock opened with an upward gap, surging by the maximum 5% daily circuit and remained locked at the 5% level at Rs 35.50 so far in the day. The stock had touched 52-week high of Rs 38 on 2 December 2013 and record low of Rs 17.65 on 3 September 2013.
The scrip had outperformed the market over the past one month till 6 December 2013, rising 23.99% compared with the Sensex's 0.49% rise. The scrip had also outperformed the market in past one quarter, surging 66.75% as against Sensex's 8.96% rise.
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The small-cap software company has equity capital of Rs 30.01 crore. Face value per share is Rs 10.
The current promoters of Accel Frontline (AFL) announced that they have today, 9 December 2013 signed definitive agreements with CAC Corporation, Japan (CAC) to induct CAC as a strategic partner in AFL.
Under the terms of the agreements, CAC will acquire a minimum of 51% 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% of the company's fully-diluted equity capital at a price of Rs 45 per equity share.
AFL will be run as a joint venture between CAC and the current promoters of AFL who will continue to be significant owners of the company. Mr. N.R.Panicker will remain as the Executive Chairman of AFL.
As a part of the growth plans for AFL, CAC will invest 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, both the companies said in a joint press release.
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, AFL will be able to access CAC's relationships in Japan to provide IT services with India as service hub. Also, AFL 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 Corporation Mr Akihiko Sako, President and CEO of CAC said "We at CAC Corporation are excited about this Joint Venture with the Promoters of Accel Frontline, which is a leading name in the IT services business in India, with an established presence in overseas markets such as USA, Japan, the UAE and Singapore. CAC Corporation is one of the oldest software development companies in Japan started way back in 1966. As part of our globalization plan, we are looking at India, not only as a market, 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 for software development services to serve our global customers."
Commenting on the development Mr. N. R. Panicker, Chairman of AFL 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 USA, the UK and other countries will give us cross-selling opportunities with our service offerings."
CAC Corporation was established in 1966 as Japan's first independent software development company. Over the last 47 years, CAC has expanded to provide range of services supporting IT utilization and the integration of IT and business processes. CAC specializes in providing services to the banking, manufacturing sectors. It has long leading Japanese companies. CAC has an independent company and is listed on the Tokyo Stock Exchange.
On a consolidated basis, Accel Frontline reported net profit of Rs 1.51 crore in Q2 September 2013 as compared to net loss of Rs 0.50 crore in Q1 June 2013. Net sales rose 42.15% to Rs 110.50 crore in Q2 September 2013 over Q1 June 2013.
Accel Frontline founded in1991 as Accel Automation, is a leading provider of integrated IT services to small, medium and large enterprises. The company has over 3,000 employees across 7 countries and offers Engineering and R&D services, Outsourced Product Development, IT Infrastructure Management, Managed Services and Enterprise Applications for the Banking, Telecom and Manufacturing sectors. AFL operates in over 100 locations in India. It has subsidiaries in USA, UAE, Singapore and Japan.
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