Murdoch eyes 20 per cent of Hughes Software Systems

MUMBAI: Rupert Murdoch is snapping at Indian shores again.

Murdoch's News Corp has announced that it would make an open offer to acquire 20 per cent shares of the Gurgaon based telecom software developer, Hughes Software Systems. The proposal comes just three months after News Corp's successful bid for a 34 per cent stake in Hughes Electronics Corporation for about $6.6 billion in cash and stock. 

Hughes Electronics is the US based parent of Hughes Network Systems, which in turn owns 55.4 per cent stake in HSS. The News Corp offer, which will be made at Rs 232 per share, is for 67,34,265 HSS equity shares, and is being made along with Hughes Network Systems India Ltd, HNS Mauritius Holdings and Hughes Electronics Corporation, the company said in a statement to the Bombay Stock Exchange on Monday.

The HSS open offer, which was made a day before the company’s board was due to meet to consider the first quarter results for the period ended 30 June, is at an 8.11 per cent discount of the company’s Friday closing of Rs 252.50 on the BSE. The offer, which opens on 20 August and closes on 18 September, is not conditional on any level of acceptance by the shareholders.

Analysts have been reported as saying that the open offer is likely to evoke a lukewarm reaction since the current price of HSS stock is higher than the open offer price, and are skeptical about the offer as News Corp did not appear to have any interest in technology solutions providers like HSS elsewhere, raising questions about the kind of fit that the firm would have within the News Corp matrix. 

The deal to acquire Hughes Electronics, however, gives News Corp access to DirecTV’s more than 11 million subscribers and concludes Murdoch’s three-year effort to gain a US outlet for his global satellite television network. A senior HSS official has been quoted as saying, "The News Corp offer has been made as per the Securities and Exchange Board of India (SEBI) regulations which stipulates that an open offer has to be made for an Indian listed company if its multinational parent undergoes any change in management." 

HSS reported a net profit of Rs 379 million in the year ended 31 March, 2003 - a decline of about 27 per cent from the previous financial year. Net sales at Rs 2204 million for 2002-03 were also lower than Rs 2349 million in 2001-02.

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