The Hindu Business Line : ‘HP, EDS need not make tender offer for MphasiS shares’

Bangalore, May 22 Mphasis Ltd, a subsidiary of Electronic Data Systems Corp, today informed the stock exchange that Hewlett-Packard and EDS would not be required to make a tender offer for the shares of MphasiS under the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.It cited exemptions contained in the regulation. EDS, in the statement, said the proposed merger, between EDS and Hewlett Packard, is under and in accordance with the laws of Delaware, in the US.

EDS said the two companies have noted certain recent press reports in India appear to suggest that, if the proposed merger is consummated, HP may be required to make a tender offer for the shares of MphasiS Ltd, a subsidiary of EDS.

An analyst with a brokerage house in India said if shares are being transferred because of a merger, then an open offer is not needed. He said according to the SEBI (Securities and Exchange Board of India) rules if there has been an acquisition and a change in ownership of 15 per cent of shares or more, the open offer is needed.

Mr Harish H.V., Partner, Grant Thornton, said at present there is no need for an open offer under the SEBI rules. He said SEBI would definitely look into the issue and if it believes an open offer would be necessary it can insist on it at a later date.

He said an open offer always comes with a premium of 20 to 50 per cent. Some people might have recently bought shares of MphasiS on hope of an open offer.

He said being taken over by HP has other advantages that will sustain the rise in share price.

Shares of MphasiS Ltd had jumped 9.88 per cent on the day the companies announced the deal on reports that HP is in talks to buy EDS.

Shares of the company closed at Rs 234.25 on Thursday, which is a decrease of 1.95 per cent compared with the closing price on Wednesday.

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