Satyam`s khoj ends at Indiaworld
29-11-1999 21:20:36
Satyam Infoway, the Internet arm of Satyam group today announced a major acquisition. Satyam Infoway Ltd. (SIL) has bought 24.5% stake of Indiaworld at a price of US$28mn, thus valuing Indiaworld at Rs1222mn (US$115mn). Satyam Infoway, India`s first private Internet Service Provider (ISP) plans to integrate Indiaworld`s popular websites with Satyam Infoway`s portal, satyamonline.com.
According to the terms of the agreement signed between SIL and Indiaworld, SIL has an option to purchase 75.5% of the outstanding shares of Indiaworld at any pointof time prior to June 30, 2000 at a price of Rs3765mn (US$87mn). SIL has also placed a non-refundable deposit of Rs513mn (US$12mn) for the option.
According to the chairman of Satyam Infoway,Ramalinga Raju, the merger will be synergistic as Satyam, which is an ISP, will be integrated with India`s best known portal Indiaworld. A part of the cost of acquisition will be funded through the funds raised recently in US. Satyam Infoway raised U.S.$75mn at U.S.$18 per ADR in October through an IPO and had indicated aggressive plans for growth in the internet business.
For the last one year, Rajesh Jain, MD of Indiaworld has been negotiating with a number of investment bankers and venture capitalists for a placement. However, no one offered him a good value and hence he decided to sell off to Satyam Infoway. IndiaWorld`s websites registered an aggregate of 13 million pageviews in October 1999 - most of them coming from outside India. Indiaworld is a portal that acts as an umbrella to a series of portals/search engines such as Khel.com and Samachar.com, Khoj.com, Bawarchi.com, dhan.com and newsasia.com among others.
In a press note, CEO of Satyam Infoway, R. Ramaraj, said, "IndiaWorld is a perfect fit for Satyam Infoway. SatyamOnline is already a very popular portal in India with focus on purposeful browsing and e commerce. The new joint venture with Bank of Madura, ties2India.com, is focussed on providing financial services and e commerce to India interest audience overseas. IndiaWorld, with its dominant audience overseas, would provide that perfect fit to make SatyamOnline the portal of choice for India. The transaction signifies our efforts to continue to aggressively pursue growth initiatives that will result in shareholder value creation."
Describing the tie-up as a momentous event in the history of the internet, the chairman of Satyam Infoway, B. Ramalinga Raju, said, "I am very pleased that the Satyam Infoway team has made an important strategic move that fortifies its leadership position." Hemendra Kothari, Chairman of DSP Merrill Lynch, who advised IndiaWorld on the sale transaction, said, "This transaction represents a win-win for both parties. While being the largest transaction of its kind from India, I am particularly pleased that it heralds the recognition of internet entrepreneurship in India, similar to the huge phenomenon witnessed in the Silicon Valley. We are happy to have played a role in combining two complementary business models into what we believe would be the leading portal of India."
Satyam Computers closed at Rs1920 on the BSE today.(Probity) |
