Tuesday, July 15, 2003
News Corporation's decision to make an open offer to shareholders
of Hughes Software Systems (HSS) has caught most investors
unawares. Not that it matters much, because the offer price
of Rs 232 is at a discount to the current market price of
Rs 252.3.
News Corporation had announced its take-over of Hughes Electronics
back in April. Since Hughes Electronics Indian subsidiary,
Hughes Network Systems India holds a majority stake in HSS,
an open offer was anticipated. It's the timing that has surprised.
According to analysts, News Corp's acquisition got completed
only now, which is the reason for the open offer. The offer
price of Rs 232 is based on the average closing price in the
last two weeks.
The average of the closing prices in the last six months
works out to just Rs 190. But that doesn't mean the offer
is attractive after Infy's results, the share price of HSS
has jumped to over Rs 250. Also, given the recent improvement
in the company's business fundamentals, analysts are
recommending a hold on the stock.
Global telecom majors have increased outsourcing activity
lately, which has Led to a considerable improvement in the
performance of HSS's core telecom business. As a result, it
has also decided to go slow on its plans to enter the BFSI
(banking, financial services and insurance) space. This move
has been taken well by the markets, as an entry into a new
vertical could have
been a drag on profitability.
Last updated : February 2, 2004
|
