Tanla Solutions today signed a definitive share purchase agreement to acquire Karix Mobile (formerly known as mGage India) and its wholly owned subsidiary Unicel from GSO Capital Partners, a Blackstone company, at an enterprise value of ₹340 crore. Shares of Tanla Solutions ended 4.91 per cent higher at ₹40.60 on the BSE.
GSO will receive a cash payment of ₹112 crore. This will be funded from Tanla’s internal accruals. Further, GSO will be issued ₹125 crore worth of Tanla stock at a price of ₹56.79 per equity share. Tanla will take over a debt of ₹103 crore.
On a fully diluted basis, GSO will own approximately 14.6 per cent in the Hyderabad-headquartered Tanla, promoters 30.6 per cent, employees 5.6 per cent and public shareholding 49.2 per cent on completion of the deal. GSO will have an observer seat on Tanla’s board, according to a press statement.
The promoters have to subscribe to 7.9 million shares to retain their pre-acquisition shareholding of 30.6 per cent. The agreed price for subscription to shares is ₹40, subject to SEBI (ICDR) regulations and approval of shareholders.
Mumbai-based Karix Mobile Private Limited is a business cloud communications provider with reach to over 1,500 enterprise clients in various industries across the country. With this transaction, the combined company will be one of India’s top enterprise cloud communications providers with customers in banking, insurance, automotive, DTH, retail, consumer products, e-commerce, m-commerce, and the government.
GSO is entitled to pre-emptive rights in future allotment of capital, to enable GSO to avoid dilution. Karix Mobile, an 18-year-old global brand, has offices in four major Indian cities and a revenue of ₹540.24 crore in FY2018.
With combined revenues of ₹1,170 crore in FY2018, Tanla will emerge as a leading cloud communications company in India providing digital transformation strategies to its enterprise clients. The company expects cost synergies of approximately ₹15 crore, over the next six quarters of operations.
The acquisition is expected to close by October and is subject to approval from Tanla’s shareholders and regulators, if any.
Uday Reddy, Tanla Solution’s Chairman and Managing Director, said: “Our combined entity will unarguably be a cloud communications behemoth with innovation-led offerings in the digital space for our partners and clients alike.”
Jason New, Senior Managing Director of Blackstone, said: “We are delighted to realise part of our investment and look forward to supporting the company in its next phase of growth with Tanla.”
Jay Sheth, CEO of Karix, said: “The combined strength of Karix and Tanla will afford our enterprise customers a single source for a comprehensive suite of communications services, and an assurance that their future emerging requirements will be met timely.”