Companies & Sectors
CCEA clears GlaxoSmithKline's Rs6,400 crore FDI proposal

After the purchase, promoter group holding in GlaxoSmithKline Pharmaceuticals will go up to 75% from the current 50.67% stake


The Indian government on Thursday cleared a foreign direct investment (FDI) proposal worth Rs6,400 crore of healthcare company GlaxoSmithKline to acquire additional 24.33% stake in its India unit.


The Cabinet Committee on Economic Affairs (CCEA) approved the proposal of Singapore-based GlaxoSmithKline Pte Ltd for acquisition of 24.33% shares in its existing Indian subsidiary GlaxoSmithKline Pharmaceuticals.


The said acquisition "would be done by way of a voluntary open offer under SEBI (SAST Regulations) in the pharmaceutical sector," an official statement said.


"The approval would result in foreign investment of approximately Rs6,390 crore in the country," the statement added.


GlaxoSmithKline Pharmaceuticals is already majority owned and controlled by the GSK Group.


After the purchase, holding of the promoter group firm in the Indian subsidiary will go up to 75% from the current level of 50.67%.


GSK Pharma makes, distributes and trades in a variety of drugs. Its portfolio include prescription medicines and vaccines across areas such as anti-infectives, dermatology, and gynaecology.


The company employs more than 5,000 people and generated more than Rs2,600 crore turnover during the financial year ended 31 December 2012.


SAT upholds SEBI's Rs10 lakh fine on Keynote Corporate Services

SAT noted that while the loss caused to investors of Edserv Softsystems cannot be quantified but it was certain that investors, as a whole, incurred huge losses as a result of IPO due to the act of Keynote


The Securities Appellate Tribunal has upheld the Rs10 lakh penalty levied by Securities and Exchange Board of India (SEBI) on Keynote Corporate Services in a matter related to regulatory violations in initial public offering (IPO) of Edserv Softsystems in 2009.


SEBI had found that Keynote as a book running lead manager to the IPO of Edserv Softsystems, had failed to exercise due diligence by not including details of inter-corporate deposits (ICDs) availed by the company in the prospectus, thereby violating prescribed norms.


Accordingly, in January 2012 SEBI slapped a penalty of Rs10 lakh on Keynote, following which, the entity approached SAT challenging the regulator's ruling.


While upholding the penalty on Keynote, the SAT, in an order on 19th February, said that the responsibility of the entity 'was major, since he plays the coordinating role in bringing out IPO and is conceived to be the one who certifies veracity and adequacy of all disclosures...".


It also "had the responsibility of bringing out all relevant facts and to ensure that no material information/ fact is withheld ....And has authority to call for all relevant information from company seeking IPO and is expected to carry out due diligence to bring our truth and adequacy of information in IPO at all stages," SAT said.


"The penalty is, therefore, upheld and appeal against the impugned order is dismissed," it added.


Keynote had failed to mention in the prospectus of Edserv Softsystems that the company had taken ICDs of Rs4 crore as result of which the investors could not make "informed decision" for investing in the IPO.


SAT noted that while the loss caused to investors "cannot be quantified" but it was "certain that investors, as a whole, incurred huge losses as a result of IPO".


Facebook to buy WhatsApp for $19 billion

The WhatsApp buy is Facebook’s biggest acquisition and comes less than two years after Mark Zuckerberg raised $16 billion from its IPO

Social networking company Facebook said it would buy WhatsApp, the fast-growing mobile messaging service for $19 billion in cash and stock.


The deal bolsters the world’s biggest social network by adding the 450 million users of WhatsApp, which will be operated independently with its own board.


It is Facebook’s biggest acquisition and comes less than two years after Mark Zuckerberg’s company raised $16 billion in the richest tech sector public stock offering.


The purchase includes $12 billion in Facebook shares and $4 billion cash. It calls for an additional $3 billion in restricted stock units to be granted to WhatsApp founders and employees that will vest over four years.


“The acquisition supports Facebook and WhatsApp’s shared mission to bring more connectivity and utility to the world by delivering core Internet services efficiently and affordably,” Facebook said in a statement.


Facebook reportedly sought to acquire another hot messaging company, Snapchat, for $3 billion last year.


“WhatsApp is on a path to connect one billion people. The services that reach that milestone are all incredibly valuable,” said Zuckerberg, Facebook founder and chief executive.


“I’ve known (WhatsApp founder) Jan (Koum) for a long time and I’m excited to partner with him and his team to make the world more open and connected.”


WhatsApp is a cross-platform mobile app which allows users to exchange messages without having to pay telecom charges.


“Almost five years ago we started WhatsApp with a simple mission: building a cool product used globally by everybody. Nothing else mattered to us,” Koum said in a blog post.


“Today we are announcing a partnership with Facebook that will allow us to continue on that simple mission. Doing this will give WhatsApp the flexibility to grow and expand, while giving me, (co-founder) Brian (Acton), and the rest of our team more time to focus on building a communications service that’s as fast, affordable and personal as possible,”  Koum added.




3 years ago

While the deal is in the premium range, even if the valuation was brought to realistic level, this should drive home a point to the domestic IT companies. Good software engineering pays off. The valuation achieved by our IT companies has taken a decade while the same has been achieved in half the time that too at double the value. Instead of doing some menial job, we should be looking at building things at a larger scale.

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