IBM, Wipro eye a piece of Polaris: report
21 Nov 2008
A likely sale by Citi of its 43 per cent stake in the software company Polaris is expected to attract IT majors like IBM and Wipro, media reports suggest.
NDTV quoted unnamed sources as saying that IBM would be one of the frontrunners for a possible stake in Polaris, competing against Wipro. It reported that negotiations would hover around Rs60 per share, almost double the scrip's current market price.
However, reports said that a deal would only be possible if Polaris chairman and managing director Arun Jain practically exists the company, surrendering control and his seat on the company's board, as he has an agreement clause that grants him full control of the company irrespective of his holdings.
Jain was reported in the media as dismissing speculation about Citi planning to sell its stake in the software company, while saying that the US bank cannot do that without first getting the approval of Polaris' management.
However, the market is taking heart from the fact that Citi, in dire need of cash to get its act together, exited its captive BPO Citigroup Global Services and a similar move on Polaris would also make sense. Along with its wholly-owned subsidiary Orbitech, Citi has a little more than 43 per cent in Polaris. Moreover, if this 43 per cent goes up for sale, an open offer for another 20 per cent stake would be virtually automatic. That would put 63 per cent of the company on the block, making it a complete buyout, since the promoters hold around 29 per cent of the company.
However, Jain still maintains that Citi is a ''strategic investor'' in Polarisand that there has been ''no dialogue on this subject between Citi and Polaris." Shares of Polaris closed up Rs0.75, or two per cent higher at Rs38. (See: Citigroup weighs options as shares plunge to 15-year low)
