Flextronics today announced its proposal to de-list its India-based subsidiary Flextronics Software Systems Limited (FSS), previously known as Hughes Software Systems Limited, by purchasing all of its outstanding publicly-held shares.
Flextronics currently owns 69.7% of FSS through its wholly owned subsidiary, Flextronics Sales & Marketing (L-A) Limited. Commenting on the proposal, Michael Marks, Flextronics` Chief Executive Officer, stated: "Completion of this transaction will enhance our operating flexibility, streamline our service offering in this area and provide an attractive exit opportunity to public shareholders. However, if we find that the ultimate terms of this proposal are not acceptable to Flextronics, we will examine alternative strategies for our Indian operations."
Flextronics intends to acquire the outstanding shares of FSS in accordance with the delisting guidelines as set forth by the Securities and Exchange Board of India (SEBI) through a shareholder-led reverse book build process.
Shareholders of FSS may tender their shares to Flextronics Sales and Marketing (L-A) Limited, at a price at or above the "floor price" to be determined in accordance with the SEBI guidelines (being the average price of the company`s shares as quoted on the National Stock Exchange (NSE) in the 26 weeks preceding the date of the public announcement to be issued under the SEBI guidelines).
Flextronics is prepared to acquire the shares offered to it at Rs.575 (US$13.23) per share, subject to all requisite shareholder and regulatory approvals being obtained, including the number of shares required for delisting being offered at this price. This price represents a premium of approximately 9.7% to the average of the closing prices of the FSS shares as quoted on the NSE in the six months preceding the date of this statement and a 4.5% premium to the closing price of Rs.550 (US$12.66) per share on 3 May 2005, the last trading day before the delisting proposal was communicated to the board of directors of FSS.
Additionally, Flextronics believes that given the low liquidity in the FSS stock, the delisting offer would provide the public investors of FSS with an attractive exit opportunity.
Flextronics reserves the right not to acquire the offered shares if the final price, as determined by the SEBI delisting guidelines id more than Rs.575 (US$13.23) per share.
All US$ translations are at the rate of Rs. 43.46/US$.
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