Hughes companies seek a week’s time to clarify impact of merger

Our Markets Bureau

Mumbai, Nov 5: Hughes Software and Hughes Tele.com (India) on Monday sought a week’s time from the Securities and Exchange Board of India (Sebi) to furnish details on the possible impact of the merger of US-based Hughes Electronics Corporation (HEC) with EchoStar Communication Corporation (ECC).

The details, when furnished, would help Sebi understand the exact impact of the amalgamation/merger of HEC with ECC and the subsequent impact on Indian companies. In turn, Sebi would then be able to say whether, or not, the foreign parent should make an open offer for Indian shareholders in Hughes companies.

Sebi had called the companies on Monday to clarify on the impact of the amalgamation of these two companies on the Indian companies promoted by HEC. “The companies, through a letter sent today, sought some more time to furnish details and clarification on the subject,” said a top Sebi source.

Last month, Hughes Software and Hughes Telecom (India) had in a letter to the stock exchanges informed that there was no intimation (from the US company) to acquire Indian shares (in Hughes Software and Hughes Telecom), because this was an amalgamation and not an indirect acquisition of Hughes Electronics by ECC.

This communication has left the Indian shareholders of Hughes Software and Hughes Tele.com (I) confused as they had expected an open offer from the US acquirer. Accordingly, the share prices of both these companies have been rising.On Monday, Hughes Software closed Rs 17.90 up to Rs 252.70, on a volume of 11.68 lakh shares. On October 31, the stock closed at Rs 212.65.

Hughes Tele.com (I) closed on Monday at Rs 8.30, up marginally by Rs 0.20 on a relatively small volume of 12,853 shares. On October 31, the stock was quoting at Rs 8.20. According to latest annual report of Hughes Software, the holding company, through its subsidiaries holds 1,86,66,666 shares, or 55.73 per cent of the company’s total equity.

Following the announced merger of HEC with EcoStar, there was change in the management of Hughes group of companies, and accordingly, in the management of Indian companies. Both these companies have called an EGM to seek shareholders’ approval of the possible change in managemnet in the Indian companies. This has led the shareholders of both these companies to expect that the acquirer would make an open offer to the Indian companies.