Another Bangalore-based company is also in the fray
US-based CDC Software is in talks to acquire the promoters’ stake in Bangalore-based information technology (IT) services and solutions company Sonata Software.
Apart from Nasdaq-listed CDC Software, a Bangalore-based Indian IT services company is also in the fray to acquire the promoters’ stake in Sonata Software. According to sources close to the development, the Bangalore-based company is close to conducting a due diligence on Sonata Software. However, the name could not be confirmed.
“There are two firms that are in talks with the promoters of Sonata. One is US-based CDC Software and another is an Indian services firm. For CDC, this acquisition gives it an entry to India and a bigger market presence. Whereas, the other Indian firm is looking at this asset to diversify into the product space,” said an investment banking source.
As on June 30, the promoters had 45.41 per cent stake in Sonata Software. Of this, Bhupati Investment Finance had 21.94 per cent, majority owned by Shyam Bhupatirai Ghia. Rajan B Raheja and family had 22.05 per cent, Mukund D Dalal owned 1.23 per cent, and the rest by others.
“The promoters have been looking for an exit as they have cash pressure. They have been an early entrant into the IT segment. However, the promoters, who also own Futura Polyesters, have cash pressure and are planning to exit from the company,” said another source.
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For the last five quarters, Futura Polyesters, engaged in the manufacturing and marketing of polyester products, has been posting losses. The revenues were in the range of Rs 88 crore to Rs 110 crore.
Sonata Software said, “We do not comment on market speculation.” Shyam Ghia, the chairman and managing director of Futura Polyesters, denied the talks of stake sale.
Promoter Bhupati Investment Finance sold 320,000 shares of the company in the first week of August, bringing down its stake from 21.94 per cent to 20.68 per cent. Analysts said this could also be an inter se transfer.
Shares in Sonata Software today closed 6.3 per cent higher at Rs 56.30 on the Bombay Stock Exchange.
CDC Software, a $204-million (around Rs 938 crore) company, has presence in over 50 countries. Earlier this year, the company’s Global CEO, Peter Yip, had said it would invest $200 million to acquire new companies, mainly in cloud computing space in India and other countries, in the next few years. Betting on India and south-east Asia’s significant growth potential in the coming decade, CDC Software expects the region to contribute 30 per cent to its overall revenue in a couple of years.
Sonata Software had reported a net profit of Rs 18.23 crore, an increase of 3 per cent on a year-on-year basis, and revenue of Rs 107 crore for the first quarter ended June 30. For 2009-10, it reported a revenue of Rs 1,380 crore and a net profit of Rs 79.87 crore. The company has 2,800 employees and eight development centres.