- The Hinduja Global group sold its healthcare division for Rs. 8,000 crores and declared a dividend of Rs. 150 per share, recently.
- The shareholders were unhappy with the amount and the share price plunged by more than 20% on January 7th.
- Its board approved a Rs. 1,000 crore buyback to soothe its shareholders. Further, it announced the acquisition of NXT digital, its media vertical.
Days after Hinduja Global Solutions Ltd.’s dividend left investors disappointed, It announced a buyback worth up to Rs. 1,000 crore. The board approved a buyback of up to 25% of the paid-up capital, and reserves and surplus which is the maximum percentage allowed under the regulations, according to the company’s statement.
The quantum of the buyback, its price and timing will be decided after the bonus issue is completed in March, and the audited financial statements are available in the April-June quarter, the company said.
On January 7th, the share plunged by 20% after the company’s dividend of Rs. 150 per share and the 1:1 bonus issue, causing concerns amongst the investors. This buyback is aimed at rewarding the shareholders and soothing their concerns. The company said that it would receive Rs. 8,000 crore from the sale of its healthcare division, while the total outgo was Rs. 313.2 crores.
If the buyback is up to Rs. 1,000 crores and it is about 25% of its paid-up capital and reserves, it means that the company might have a paid-up capital and reserves totalling up to Rs. 4,000 crores (1000/ 25%). This amount is half the inflow from the deal (sale of its healthcare division).
The company’s board also approved a related-party transaction to acquire NXTDIGITAL Ltd.’s listed cable distribution business in an equity swap deal. NXTDIGITAL is the media vertical of the Hinduja Group. The deal would involve the acquisition of digital and media businesses comprising broadband, teleshopping, digital cable television, HITS (Headend-In-The-Sky) and content syndication.
The swap ratio is yet to be decided based on the valuation report. NXTDIGITAL Ltd.’s market capitalization was Rs. 1356 crore as of January 14. The company will appoint independent valuers to facilitate the valuation exercise and submit the report. Its share price rose by over 13% today and is trading at Rs. 454.75 per share, today. However, the shareholders of Hinduja Global did not seem to like it, as its share is down by more than 6% today.
The company, in a statement, said that the proposed acquisition fits with the company’s strategy of becoming a digital company.
NXTDIGITAL’s HITS satellite platform was the only one of its kind in the country and was available in more than 1500 cities and towns. Its digital cable television platform delivers 700+ channels across 100+ cities.
Source: Bloomberg Quint, The Hindu Businessline.
