Tata Sons subsidiary Panatone Finvest Limited has signed a definite agreement to pick a 43.3 per cent stake in Tejas Networks for about ₹1,850 crore. Tejas Networks designs, develops and sells networking products to telecommunications service providers, internet service providers, utilities, defence and government entities.
The company will use the proceeds from the preferential allotment to invest organically and inorganically in the research and development, sales and marketing, people, infrastructure and to enhance manufacturing and operational capabilities.
Panatone and other companies of the Tata group will also make a public announcement to acquire up to 4.03 crore equity shares of Tejas Networks representing 26 per cent of the emerging voting capital, in accordance with SEBI Takeover Regulations.
Deal structure
The definite agreement between Panatone and Tejas Networks includes a preferential allotment of 1.94 crore equity shares at ₹258 per share aggregating to ₹500 crore. It includes a preferential allotment of 3.68 crore warrants, each carrying a right to subscribe to one equity share at an exercise price of ₹258 per equity share aggregating, to ₹950 crore. This may be exercised by Panatone in one or more tranches during the period starting from the date of allotment of the warrants until expiry of 11 months thence.
There is also a preferential allotment of 1.55 crore warrants, each carrying a right to subscribe to one equity share at an exercise price of ₹258 per equity share aggregating to ₹400 crore. This may be exercised by Panatone in one or more tranches during the period commencing from the expiry of 12 months from the date of allotment of the warrants until the expiry of 18 months thence. The agreement also includes the acquisition of up to 13 lakh equity shares of Tejas Networks from certain personnel in management, at a price not exceeding ₹258 per equity share aggregating to ₹34 crore.
“Tejas Networks was started with a vision of creating a top-tier global telecom equipment company from India. The association with Tata group will accelerate the realisation of this vision and enable us to address the large market opportunity available to us to build a financially strong global company,” said Sanjay Nayak, CEO and Managing Director, Tejas Networks. Post the agreement, Nayak will continue in his role along with the existing management team.
Saurabh Agrawal, Executive Director, Tata Sons , said: “We look forward to working with Tejas Networks and create a full stack of wireline and wireless products.”