CITICORP TO BUY
100% STAKE IN E-SERVE
US-based banking major Citigroup has announced that it intends
to buy out the 55.6 per cent public shareholding in its publicly
listed subsidiary, business process outsourcing company e-Serve
International, for Rs 550 crore.
Citigroup is looking at offering e- serve's
existing shareholders up to Rs 800 per share for buying their
holding in the company. This puts the enterprise value of
e-Serve at more than Rs 1,000 crore.
Citigroup is the largest shareholder with
its current stake of 44.4 per cent. Citigroup is also the
sole customer of e-Serve which makes it a captive unit of
the banking major.
After Citigroup, mutual funds own 15.87 per cent, FIIs own
another 7.10 per cent, public own another 25.51 per cent the
remaining 6.75 per cent is held by employees.
Citigroup wants to fully own e-Serve as
integrating it into its global operations will provide the
company with increased operational flexibility to support
its business and meet the needs of its customers, a press
release from Citigroup says.
E-Serve, which is located in the Mumbai
suburb of Malad, employs over 4,000 people.
Citibank Overseas Investment Corporation (COIC), a wholly
owned subsidiary of Citigroup, intends to acquire the outstanding
e-Serve shares through a shareholder-led reverse book build
process. Shareholders of e-Serve may tender their shares to
Citibank Overseas Investment Corporation at a price at or
above the "floor price" determined by the Sebi guidelines.
The "floor price" is defined
as the average price of the company's shares as quoted on
the National Stock Exchange in the 26 weeks preceding the
date of the public announcement issued in accordance with
the Sebi delisting regulations.
COIC has decided that a price of Rs 800 per share presents
an opportunity for e-Serve's shareholders. A Citigroup press
release added that this price represents a premium of 27 per
cent to the closing price of Rs 630 per share on April 8,
2004, the last trading day before this offer was made public
and a premium of 26 per cent to the 52-week average share
price.
This price is also higher than e-Serve's
highest closing price over the last three years.
Citigroup Global Markets acted as sole advisors to CitiGroup.
COIC is prepared to acquire the shares offered at Rs 800 per
share, subject to the number of shares required for delisting
being offered at this price and all requisite regulatory approvals
being obtained.
