The Hindu Business Line : Asian CERC Information Technology: Reject

Fortis Financial Services, the acquirer, can leverage on its capital market strength to extend the market presence and software capability of its target, Asian CERC.

Combined expertise will help
Strong financial performance
Price not so attractive

Shareholders of Asian CERC Information Technology can reject the open offer for the acquisition of an additional 20 per cent equity stake being made by the acquirer, Fortis Financial Services at an offer price of Rs 53.45 per share.

Since the Asian CERC stock is trading at Rs 71, a substantial premium to the offer price, it makes this offer an unattractive one.

Risk-averse investors can choose the secondary market route to exit the stock.

However, shareholders with a penchant for risk and a longer time horizon can stay invested as Fortis Financial Services can leverage on its capital market strength to extend the market reach and software capability of Asian CERC in this area.

As the offer document spells it out, the object of the offer is to combine the expertise of the two companies and provide information technology related financial solutions in the domestic and international markets.

While Fortis Financial Services has experience in the capital market, Asian CERC is focussed in the area of software development for the capital market and information content development for the software industry.

Its services portfolio straddles financial technology products and solutions for the capital market, offshore and knowledge management services.

For the quarter ended September 30 Asian CERC turned in a strong financial performance, with both revenues and post-tax earnings growing at a robust pace on a sequential basis.

The revenues at Rs 3.49 crore were up sharply from Rs 2.60 crore in the first quarter, while the post-tax earnings also surged.

The operating profit margin at 34 per cent was also higher than the 27 per cent recorded over the corresponding previous period.

On an annualised basis, the per share earnings is likely to be Rs 2.62 for 2006-07.

Open-offer details

In August, the acquirer, Fortis Financial Services entered into a share purchase agreement through open market purchase of 28 per cent equity in Asian CERC.

Recently, the Asian CERC Board issued additional equity to Fortis at Rs 53.25 per share.

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