Oracle not to delist i-flex for 5 more yrs

Stung by the lukewarm response to its earlier open offer to buy i-flex shares, US-based Oracle has maintained it has no plans to come out with additional open offers for i-flex shareholders for at least the next five years. In a recent filing with the US Securities and Exchange Commission, however, it added a rider stating it may think of an open offer if the share price is below Rs 2,100 per share — its offer price of December 7, 2006.

Oracle holds 83 per cent of i-flex’s shares and has been consistently trying to acquire the rest in a bid to delist i-flex from the Indian bourses. It would require a little over 90 per cent of shares to do so. The move will help it to integrate i-flex with its business worldwide.

Under current norms, if the minority shareholders do not surrender shares willingly to the new promoter, the Securities and Exchange Board of India’s (Sebi’s) takeover code requires the new promoter to come out with a proposal to buy back the rest of the shares from the minority shareholders under a proposal to delist the company.

The buy-back price is decided on the basis of the market price under the reverse book building process. Reverse book-building requires generating offers from sellers.

However, since its open offers received a tepid response, the US-based firm has reportedly been lobbying the Indian government for over a year to amend the Sebi takeover code. The amendment was aimed at compelling the minority shareholders to surrender the shares of i-flex in favour of Oracle, a government source said.

The amendment was suggested on the lines of the “minority squeeze-out norms” of the US under which minority shareholders of an acquired company are compelled to surrender their shares in favour of the new promoter that has acquired a majority stake. Official sources close to the development said the Indian government did not agree to amend the code.

Read more in The Business Standard article.

Carlyle, Apax join race for Patni stake

A clutch of top private equity guns, including Carlyle and Apax Partners, have shown interest in buying a large stake in Patni Computers, but the success of their venture depends on whether they can win crucial management rights and also secure the co-operation of Narendra Patni, the CEO and chairman.
Mr Patni, who is believed to be interested in continuing in his position after the exit of his brothers, has employment contracts that protect his interests till 2013.

According to the prospectus filed with the Securities and Exchange Commission (SEC) prior to its ADR issue on the NYSE, Mr Patni’s (Narendra) term as the chairman of the board of directors of his company ends in December 2008. However, he still has the option to continue for another 5 years in the same position in Patni Computers. Also, since Mr Patni’s consultancy agreement has been extended by the board of directors, he would also be able to continue as the CEO of the company till 2010. This is crucial to any new investor for the company, as they then would have to strike some kind of a compromise with Mr Patni in order to run the company.

Read more in The Economic Times article.

Sterlite to raise $2 bn for power plant

Sterlite Industries (India), a unit of billionaire Anil Agarwal’s Vedanta Resources, plans to raise as much as $2 billion in its first share sale in the US to pay for a new power plant.

Sterlite, India’s largest copper producer, would sell shares that will trade on the New York Stock Exchange, the company said in a filing to the Securities & Exchange Commission.

By building a power plant, Agarwal is starting his second new venture three weeks after agreeing to pay $1.4 billion for 71 per cent of India’s biggest non-state iron-ore exporter. The response to the stock sale may show if he can achieve the goal of becoming one of the world’s top-five metals and mining companies.

Vedanta Resources, which owns 72 per cent of Sterlite, last month defeated rivals including Arcelor Mittal to buy Sesa Goa. The takeover gave the company its first iron ore mine in India, where steel demand is growing at almost twice the global average fuelled by the world’s second-fastest pace of growth.

Read more in The Business Standard article.