Date:05/05/2005 URL: http://www.thehindubusinessline.com/2005/05/05/stories/2005050503320100.htm

Back Flextronics plans delisting, to buy out shares at Rs 575

Our Bureau

New Delhi , May 4

FLEXTRONICS, the electronics manufacturing services provider, today announced its proposal to delist its India-based subsidiary, Flextronics Software Systems Ltd (FSS), from both the BSE and the NSE by purchasing all outstanding public shareholding in the company at Rs 575 per share.

With the total number of outstanding public and institutional shares at about 1.03 crore, the reverse book-build offer is valued at about Rs 597 crore at the offer price.

Flextronics currently holds 69.7 per cent of FSS (formerly Hughes Software Systems) through its wholly owned subsidiary, Flextronics Sales and Marketing Ltd.

In a statement issued from Singapore, Flextronics said that it is prepared to acquire the shares offered to it at Rs 575 per share subject to shareholder and regulatory approvals.

The price quoted by Flextronics represents a premium of about 9.7 per cent to the average of the closing prices of FSS shares as quoted on the NSE in the six months preceding the date of the statement and a 4.5 per cent premium to the closing price of Rs 550 per share on May 3, the last trading day before the delisting proposal was floated.

The FSS scrip touched a low of Rs 500 on April 28 and rose to a high of Rs 629 during intra-day trade on Wednesday, closing at Rs 623.10 on the BSE.

"Flextronics reserves the right not to acquire the offered shares if the final price, as determined by the SEBI delisting guidelines, is more than Rs 575 per share," the release said.

Flextronics also said that the completion of this transaction would enhance its operating flexibility, streamline service offering, and provide an attractive exit opportunity to public shareholders.

"However, if we find that the ultimate terms of this proposal are not acceptable to Flextronics, we will examine alternate strategies for our Indian operations," said Mr Michael Marks, CEO of Flextronics, but did not elaborate on various options before the parent company.

Meanwhile, in a notice to the BSE, FSS said that it proposes to take up the matter at the meeting of its board of directors tomorrow.

When contacted, Mr Arun Kumar, President and Managing Director, refused to comment on the issue, saying: "It is a shareholder matter."

As on March 31, 2005 the promoters' holding in FSS stood at 69.7 per cent while institutional investors held 22.58 per cent, private corporate bodies 1.05 per cent, the Indian public 6.06 per cent, and NRIs/OCBs 0.12 per cent.