Processing .....please wait.. 
The article has been forwarded.... 
News >> Technology >>
Murdoch may snap links with Hughes
By siliconindia
|
Tuesday, 02 March 2004, 20:30 IST
MUMBAI: Is the Rupert Murdoch-controlled media conglomerate News Corporation looking for a strategic investor to sell its controlling stake in Delhi-based telecom software services company Hughes Software Systems? The markets certainly seem to think a deal may be underway.
According to Economic Times, the Hughes Software stock has been on the rise, in a jumpy and declining market for most of the previous week. The stock has gone up by almost 13% from Rs 580 on Monday, February 23, to close at Rs 657.30, on Friday.
According to ET sources, News Corp may be looking for a strategic investor as software services does not fit in with its media and cable business, and Hughes Software System (HSS) came into its fold by way of a global takeover. Sources familiar with the situation said various possibilities are being considered. For instance, the existing HSS management may make a bid by way of a management buyout (MBO) deal or Bangalore-based Wipro Technologies may make a bid. It is learnt that Wipro is in the process of conducting a due-diligence on HSS.
Hughes Network officials, who represent News Corporations investment in Hughes Software, did not respond to questions on the issue. When contacted, Arun Kumar, CEO, Hughes Software Systems denied any such deal was in the offing.
Hughes Software is a telecom software services and products company. It provides software services to telecom equipment makers like Lucent, Motorola and Cisco, and handset companies like Ericsson. News Corporation had acquired a 55.4% stake in Hughes Software in April 03, as part of the $3.8bn acquisition of parent company Hughes Corporation. When contacted, Wipros CFO Suresh Senapaty, did not respond to queries specific to HSS. As part of our growth strategy, we are constantly in dialogue with companies and investment bankers to pursue opportunities for inorganic growth, he told ET.
According to sources, there is a possibility that the current management may be putting together a deal along with private equity investors. The stock has been up the whole of last week on the back of these rumours
Software analysts say Wipro may find Hughes a good fit as it expands its offering in the telecom and internet working market. But if the stock runs up too much before the due diligence is completed it may become too expensive for Wipro to buy, they added.News Corporation acquired Hughes Corporation from automobile giant General Motors. Hughes Corporation held equity directly in Hughes Software as well as through its investment company in Mauritius and Hughes Networks. The acquisition of Hughes Corporation resulted in News Corporation holding the controlling stake in Hughes Software and Hughes Networks India.
In September 03, News Corp announced its intention to make an open offer at Rs 232 to acquire a further 20% from the public. However, the Securities and Exchange Board of India later exempted News Corp from making a public offer.
The current shareholding in Hughes Software is News Corporation-55.4%, mutual funds 10.08%, FIIs-18.93%, banks-0.13%, private corporate bodies 7.39%, Public-7.11%, NRI/OCBs 0.16% and directors 0.18%. News Corporation holds the 55.4% stake in Hughes Software through its arms and investment companies like HNS Mauritius Holdings (HNSM), Hughes Network Systems India and Hughes Electronics Corporation.