RPG to buy out Fujitsu in Zensar, majority stake

Mumbai, Mar 05 : The RPG group has signed a share purchase agreement to buy out its partner, the Fujitsu group of companies, in its IT services JV, Zensar Technologies.

Following this, the RPG group's stake will double from its existing 29% giving it a majority 58% shareholding in the firm and also making it the single largest shareholder. The Fujitsu group's 6.9 million shares will be purchased by Jubilee Investment and Industries, which is part of the RPG group.

The price at which the deal was concluded was not disclosed. Based on Zensar's current market capitalisation, Fujitsu's 29% stake is valued in region of the Rs 160-170 crore. Last week, ET had reported Fujitsu was exiting Zensar and selling its stake to the RPG group, concluding two years of parlays and increasingly strained relations between the two partners.

RPG group chairman Harsh Goenka (who is also Zensar chairman) said, "We are delighted that Fujitsu has agreed to sell us the stake in Zensar. This enables us to consolidate our shareholding in the company and opens up possibilities of major growth in the years to come."

The announcement quoted the Fujitsu Services spokesman as saying, "We are happy that this transaction has been amicably completed. We will continue to work with the company's management to ensure that all present and future joint projects are executed professionally." The agreement will come into force immediately and the deal will be completed shortly, according to the company statement.

So far, the RPG group had management control of the venture although it did not have majority stakeholding. Its stake was held through Hilltop Holdings India (4.85%), Kocilim Breweries (10.14%), tyre company Ceat (9.38%) and Jubilee Investments&Industries (4.81%) while Fujitsu's stake was held through Fujitsu Services (26.25%) and Fujitsu Services Holdings (2.93%).

The Japanese IT services major was also interested in increasing its stake in the firm, but the RPG group was not keen on selling out or giving up management control. Zensar is among leading Indian IT firms in the country.

In fiscal 2006, it posted a net profit of Rs 34 crore on revenues of Rs 433 crore. For the nine month period ended December 31, 2006, it had an income of Rs 434.5 crore and net profits of Rs 39.98 crore. On Friday, Zensar shares closed almost 2% higher at Rs 242.65 in a bear market.

OneIndia News

>