Maars merger with Mascon Global off

By Our Special Correspondent

CHENNAI, JULY 19. The proposal to merge Maars International Software with Mascon Global has been spiked. A decision to this effect was taken by the boards of the two companies which met yesterday.

They have cited the ``current market conditions'' for dropping the merger plan. Given the ``stock market conditions'', the ``merger at this stage is not in the interest of the shareholders,'' says a delayed release from Mascon. Surprisingly enough, both the companies claim that they will work in tandem to do business.

According to Mr. V. Vedantham, Director, Maars Software, the decision was also caused by the `slower than expected' growth in IT (information technology) sector.

Nevertheless, the announcement comes in the wake of similar failures experienced by couple of other Chennai-based companies on the takeover front.

Polaris Software is entangled in legal battle over its proposal to take over Data Inc of the U.S. Similarly, PentaMedia Graphiscs' proposal to acquire Film Roman of the U.S., too, has come under cloud.These takeovers and mergers were announced with a lot of fanfare. The inability of these companies to take their stated intentions to logical end has been causing quite a consternation among investors and the regulator alike.

PentaMedia and Polaris may plead helplessness since the issue has gone `out of their hands'.

In the case of merger of Maars with Mascon, the stated reason for crying off the move - stock market conditions - has not really helped the cause of corporate governance any bit.Only in March this year, the respective boards of these companies had approved a swap ratio of one Mascon share for every nine shares of Maars.

The IT industry scene - both here and the U.S. - was slowing down even at that point of time. Mr. Vedantham's reasoning for calling off the merger, industry observers argue, may not quite carry conviction.

Market pundits, nonetheless, feel that the regulator should devise a mechanism which discourages companies from announcing mergers and take-overs only to call them off at convenient times.

The regulator, it is felt, must direct the exchanges to compensate investors from out of the investor protection fund for the loss, if any, sustained due to abrupt end to merger proposals.

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Section  : Business
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