Blue Star Infotech was locked at 20% lower circuit at Rs 231.10 at 11:15 IST on BSE after the company said it will sell its IT business to Infogain and consequently will merge with Blue Star.
The company made announcement after market hours yesterday, 29 September 2015.
Shares of Blue Star rose 4.01% to Rs 345.35.
Meanwhile, the S&P BSE Sensex was up 164.98 points or 0.64% at 25,943.64.
On BSE, so far 6,572 shares were traded in the counter as against average daily volume of 20,668 shares in the past one quarter.
The stock opened at Rs 231.10 and was locked at that price so far during the day. The stock had hit a 52-week low of Rs 160.30 on 8 May 2015. The stock had hit a 52-week high of Rs 315.70 on 19 August 2015.
The stock had outperformed the market over the past one month till 29 September 2015, rising 5.13% compared with 2.33% fall in the Sensex. The scrip had also outperformed the market in past one quarter, jumping 57.9% as against Sensex's 6.75% fall.
The small-cap company has equity capital of Rs 10.80 crore. Face value per share is Rs 10.
Blue Star Group entity, Blue Star Infotech (BSIL) announced the sale of its IT business to Infogain Inc, a ChrysCapital portfolio company, for an aggregate consideration of Rs 180.80 crore. BSIL will retain a real estate business and other assets, the fair value of which is expected to be around Rs 96.7 crore. Infogain Corporation is engaged in the business of providing information technology, software development and consulting services.
Consequently, Blue Star and BSIL have announced that the two entities will merge, subject to shareholder approval of the respective companies. In effect, by the way of the above merger, the residual operations of BSIL, namely a real estate business, together with other assets, will get integrated with Blue Star.
With a constant endeavor to deliver value, the Group has done a strategic review of its businesses and their capital requirements and taken a decision to sharply focus on its core air-conditioning and refrigeration business. Further, the proposed merger will enable the Group to efficiently access a substantial part of the required growth capital for its core businesses. Blue Star's strategic initiatives require significant investments going forward.
Subject to the completion of BSIL's IT business sale, it is proposed to merge BSIL with Blue Star with effect from 1 April 2015. Shareholders of BSIL on the record date for the scheme will be issued equity shares in Blue Star as per the share swap ratio of 7 shares in Blue Star for 10 shares in BSIL.
Blue Star forayed into the Information Technology space in 1983. In 2000, the Blue Star Group executed a strategic shift to hive off its IT business into an independent company, Blue Star Infotech, as this business necessitated specialised focus and was significantly different from its core business.
On a consolidated basis, Blue Star Infotech's net profit rose 55.67% to Rs 7.27 crore on 8.89% rise in total income to Rs 77.51 crore in Q1 June 2015 over Q4 March 2015.
Blue Star Infotech is a technology consulting and services company and has been in operation for more than 30 years. It has offices in USA, UK, Europe, India, Singapore and Malaysia. It is a part of the Blue Star Group and a conglomerate with a rich 70-year history.
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