Mphasis - EDS - India to merge into Mphasis

Mphasis BFL Ltd has announced that the Board of Directors of the Company has passed a resolution by circulation by which the proposal to amalgamate the entire business and undertaking of EDS Electronic Data Systems (India) Pvt Ltd ("EDS India") into the Company in terms of a scheme of amalgamation under section 391-394 of the Companies Act 1956 was considered and approved.

The proposed scheme of amalgamation provides that upon its sanction, the merger will take effect from the appointed date i.e. April 01, 2006. All assets, liabilities and obligations of EDS India as per the scheme of amalgamation will vest in the Company with effect from the appointed Date.

The draft scheme of amalgamation was also approved by the Board of Directors by circular resolution, and certain officers of the Company have been authorized to finalise and settle the draft of the scheme as well as all other documents to be filed in connection therewith.

The Board of Directors of the Company also approved the share entitlement ratio of 5 equity share(s) in the Company of the face value of Rs 10/- each credited as fully paid up for every 4 equity shares of Rs 10/- each held by members of EDS India. The share exchange ratio has been arrived at after taking into account the recommendation of M/s Deloitte Haskins & Sells (Chartered Accountants, Bangalore) who were appointed as the valuers for the purpose by the Board on June 27, 2006.

All the above are subject to requisite approvals including those of Stock Exchanges, shareholders, creditors, any regulatory authorities and sanction of the scheme of amalgamation in terms thereof by the High Court of Judicature at Bombay and the High Court of Karnataka.

Jerry Rao, CEO, of the Company said, "We are excited about this merger. The combined entity will help us achieve an optimal business model in India and provide dear career paths and opportunities for all employees as we also enhance the service offering to our clients."

The swap ratio of the merger as determined by an independent valuation of the two Companies works out to 5:4 (5 shares of the Company for every 4 shares of EDS-India). The merger is also expected to be EPS accretive to the Company and will enhance shareholder value. The process of operationally integrating EDS India into the Company is expected to complete by the end of this calendar year but would be effective from April 01, 2006 as per the merger proposal approved by the Boards of both the Companies. The proposal is subject to approval of the stock exchanges, shareholders of both Companies and the High Courts at Mumbai and Karnataka. Through this merger EDS stake in the Company will increase to approximately 61.8% from about 51.4% at present.

Source : Equity Bulls

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