India-based communications technology supplier Tejas Networks (BSE: 540595; NSE: TEJASNET) says it has agreed with Panatone Finvest Ltd., a subsidiary of Tata Sons Private Ltd., that will enable Panatone to acquire a controlling interest in Tejas. Panatone is expected to make an open offer to buy up to 4.03 crore (40.3 million) equity shares, representing 26% of Tejas shares, in according with SEBI takeover regulations.

The agreements provide Panatone access to four groups of Tejas shares:

1. a preferential allotment of 1.94 crore (19.4 million) equity shares at a price per equity share of INR 258 ($3.47) per share aggregating to INR 500 crore (INR 5 billion or $67.3 million)
2. a preferential allotment of 3.68 crore (36.8 million) warrants, each carrying a right to subscribe to one equity share at an exercise price of INR 258 per equity share aggregating to INR 950 crore (INR 9.5 billion or $130 million) that Panatone may exercise in one or more tranches within 11 months of allotment
3. a preferential allotment of 1.55 crore (15.5 million) warrants, each carrying a right to subscribe to an equity share at an exercise price of INR 258 per equity share aggregating to INR 400 crore (INR 4 billion or $54 million) that Panatone may exercise in one or more tranches in the window between 12 months and 18 months from the date of warrants’ allotment
4. the acquisition of up to 13 lakh (1.3 million) equity shares of Tejas from “certain personnel in management” at a price not to exceed INR 258 per equity share aggregating to INR 34 crore (INR 340 million, or $4.58 million).

The board of directors at Tejas has approved these allotments and warrants; the transactions are subject to shareholders' approval and other customary closing conditions and approvals.

"We are delighted about our association with the Tata group, which has a long history of building highly successful global businesses of scale. This association provides us the necessary financial resources, global relationships and strong ecosystem to innovate and scale our business," commented V Balakrishnan, chairman of Tejas Networks.

“We are privileged to be part of the Tata group, which has a rich legacy as India's most visible and trusted business brand. Tejas Networks was started with a vision of creating a top-tier global telecom equipment company from India,” added Sanjay Nayak, who will retain his current roles as CEO and managing director at Tejas Networks. “The association with Tata group will accelerate the realization of this vision and enable us to address the large market opportunity available to us to build a financially strong global company, backed by a trusted brand. I am fully committed to making this a success and am excited about the next phase of our journey."

"We are excited to partner with Tejas Networks, India's leading telecom and network company with a strong DNA of R&D. We look forward to working with the highly experienced management team of Tejas Networks and creating a full stack of globally competitive wireline and wireless products," concluded Saurabh Agrawal, executive director of Tata Sons.

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