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.
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