At meeting held on 20 July 2020
The Board of Majeco at its meeting held on 20 July 2020 has transacted the following -1. The board of directors of Majesco, the material subsidiary of the Company ("US Subsidiary), in its meeting held on 20 July 2020, approved and declared as advisable and in the interest of its shareholders the merger (Merger) between the US Subsidiary and Magic Merger Sub, Inc., a Delaware corporation (Merger Sub) and a wholly owned subsidiary of Magic Intermediate, LLC, a Delaware limited liability company (Parent), in accordance with the provisions of the California Corporation Code, as amended. In the Merger, inter alia, all of the outstanding common stock of the US Subsidiary will be extinguished and eligible shareholders (including the Company) will become entitled to receive cash in the amount of US$ 13.10 per share of common stock of the US Subsidiary, subject to any applicable withholding taxes. Pursuant to the Merger, the US Subsidiary will become a wholly owned subsidiary of the Parent. In relation to the Merger, on 20 July 2020, the US Subsidiary has entered into an agreement and a plan of merger with the Merger Sub and the Parent (Merger Agreement). The Merger Sub and the Parent are the affiliates of Thoma Bravo LP.
The board of the directors of the Company (Board), at its meeting held on 20 July 2020, after considering the recommendations of the audit committee, approved the sale of the Company's entire stake/ investment in the US Subsidiary pursuant to the Merger, subject to the approval of the shareholders of the Company and other regulatory and statutory approvals, as may be required.
The Merger is subject to the terms of the Merger Agreement and receipt of shareholders' approvals and other regulatory and statutory approvals, as may be required in the United States.
As on date, the Company holds 32,111,234 common stock of the US Subsidiary. The disposal of Company's entire stake/ investment in the US Subsidiary pursuant to the Merger is beneficial for the following reasons:
Also Read
a) Substantially all the business of the Company is conducted through the US Subsidiary. Further, the majority of the business of the US Subsidiary is from clients based outside of India.
b) Thoma Bravo LP was only desirous of investing in the US Subsidiary and not in the Company. Accordingly, the Merger was the best route available to consummate the proposed transaction under the applicable regulatory framework in the United States.
c) The US Subsidiary trades at significant premium to the market capitalisation of the Company. As on July 17, 2020, the value of the Company's entire stake in the US Subsidiary was US$ 245.33 million based on its holding of 32,111,234 of shares of common stock (as per the closing price of the common stock of the US Subsidiary as quoted on NASDAQ Global Stock Market (NASDAQ)) compared to the total market capitalisation of the Company in India of US$ 141 million (as per closing price of equity shares of the Company quoted on National Stock Exchange of India Limited (NSE) and exchange rate of INR 75/ US$). This implies a premium of 74% over the market capitalisation of the Company in India.
d) The consideration to be received by the Company in the Merger is US$ 13.10 per share of the common stock which represents a premium of ~74% over US Subsidiary's average closing price during the 30 trading day period ended on 17 July 2020.
e) The gross value to be received by the Company for its stake in US Subsidiary in the Merger is US$ 420.66 million, compared to the total market capitalisation of the Company in India of US$ 141 million (as per closing price of equity shares of the Company quoted on NSE on the last trading day prior to the announcement of the Merger and at the exchange rate of INR 75/ US$). This implies a premium of 198.34% over the market capitalisation of the Company in India.
f) The gross value to be received by the Company for its stake in US Subsidiary in the Merger is US$ 420.66 million, compared to the total investments made by the Company in US Subsidiary of US$ 68.67 million, to date.
2. The Board approved the execution of the support agreement to be entered into between the Company, the US Subsidiary, the Merger Sub and the Parent (Support Agreement 1).
In terms of the Support Agreement 1, inter alia (a) after the receipt of the shareholders' approval by the Company by way of postal ballot process, it will be required to deliver a written consent within 1 business day following the publication through the stock exchanges in India of the voting results of the postal ballot process; and (b) vote with respect to its stake in the US Subsidiary in accordance with applicable procedure in order to ensure that the vote is counted for the purposes of determining inter alia whether a quorum is present for the approval of the Merger Agreement and the transactions contemplated under the Merger Agreement. The Support Agreement 1 also includes customary representations by the Company.
Further, the Board decided that the proceeds from the disposal of the investment in the US Subsidiary (net of taxes, transaction costs and other expenses to be incurred during the intermediary period) will be distributed to the shareholders of the Company in a tax efficient manner as expeditiously as possible.
Powered by Capital Market - Live News
Disclaimer: No Business Standard Journalist was involved in creation of this content
