Mahindra to buy 5.5% stake of British Telecom in Tech Mahindra

Mahindra & Mahindra(M&M), the leading automobile company, yesterday informed BSE (Bombay Stock Exchange) that they will buy 5.5 percent stake of British Telecom in Tech Mahindra which may worth around $94 million. At present British Telecom has 30% stake in Tech Mahindra with 35% contribution to tech firms revenues. According to market analysts the stake sale of British Telecom to Mahindra and Mahindra will encourage price negotiations with other PE holders.

Presently, BT has total stake of $500 million in Tech Mahindra. However, Both business groups have denied to comment on this matter. M&M is also looking ahead to purchase the rest of British Telecom's share in Tech Mahindra and this interchange has empowered BT to sell its stake to outside buyers. After the annonuncement of M&M to purchase the British telecom stake in Tech Mahindra, the stock of Tech Mahindra diminished at Rs 625 which was 1% less than the last close. On the other hand, Mahindra & Mahindra stock also declined and closed at Rs. 757.65 which was 3 % less than its last close.

The British Exchange stock in contrast closed with 3% gain in London Stock Exchange despite of its fall in FTSE index 100 index. With this, the British Telecom is expecting for more gains in future from the Indian Stock market as they are now open to sell their remaing holding to outside investors. On the other hand a company statement stated that whenever the British Telecom's holding will fall by 10% in Tech Mahindra, the shareholder's agreement between Mahindra & Mahindra, British Telecom and Tech Mahindra will cease automatically.

The stake sale of 5.5% British Telecom, will make BT cash in on its investments even and this UK telecom giant is now looking ahead to outsource its back office work to other existing tech vendors like Infosy, TCS and Wipro. On 30th September, Mahindra and Mahindra owned around 42.77% stake as a Joint Venture in Tech Mahindra while British Telecom Group owned a 30.9% stake in Tech-Mahidra, the remaining stake was the owned by public and indivisuals.

Mahindra and Mahindra stated BSE that they have agreed to acquire 5.5% of British Telecom's holding in Tech Mahindra throught their inter se transfer amongst the qualifing promoters at market related price, contrary to SEBI regulations from the proposal received from BT.

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