News Corp open offer for Hughes soft

NEW DELHI: Rupert Murdoch-owned News Corp announced a 20 percent open offer for the shareholders of Hughes Software Services (HSS) at a price of Rs 232 per share payable in cash. The proposal comes in the wake of the $ 6.6 billion successful bid by News Corp to acquire a 35 per cent controlling stake in Hughes Electronics Corporation, the US parent of Hughes Software.

The HSS open offer, which was made a day before the company’s board was due to meet to consider the first quarter results for the period ended June 30, is at an 8.11 percent discount of company’s Friday closing of Rs 252.50 on the Bombay Stock Exchange. The offer, which opens on August 20 and closes on September 18, is not conditional on any level of acceptance by the shareholders.

“The News Corp offer has been made as per the Securities and Exchange Board of India (SEBI) regulations which stipulates that an open offer has to be made for an Indian listed company if its multinational parent undergoes any change in management,” said a senior HSS official. He, however, refused to give any further details about the offer. Most of the top ranking HSS officials are traveling to the US for the board meet and hence were unavailable for comments.

According to the information available with the SEBI, News Corp has made the open offer along with Hughes Network Systems India, Hughes Electronics Corporation and HNS Mauritius Holdings to acquire up to 6734265 fully paid up equity shares of Rs 5 each. Hughes Network currently holds a 55.44 per cent stake in the Rs 220-crore Indian software services company, and a fully subscribed offer could see the promoter holding crossing 75 per cent. Such an offer will see a total outgo of Rs 155 crore from News Corp.

While News Corp has been keen on the take over of Hughes Electronics because it owns DirecTV, the largest satellite television provider in the US, industry analysts say that the price at which the open offer has been made for HSS shareholders indicates that News Corp is not really serious about the offer and it has been made only to comply with the new SEBI takeovers guidelines.

Analysts are also skeptical about the same as News Corp did not appear to have any interest in technology solutions providers like HSS elsewhere, raising questions about the kind of fit that the firm would have within the News Corp matrix. The deal to acquire Hughes Electronics, however, gives News Corp access to DirecTV’s more than 11 million subscribers and concludes Murdoch’s three-year effort to gain a US outlet for his global satellite television network.

HSS had reported a net profit of Rs 37.9 crore in the year ended March 31, 2003–a decline of about 27 percent from the previous financial year. Net sales at Rs 220.4 crore for 2002-03 were also lower than Rs 234.9 crore in 2001-02.

(CNS)