VSNL to acquire Teleglobe International Holdings

VSNL to acquire Teleglobe International Holdings

Indian Telecom giant VSNL has announced plans to acquire Teleglobe International Holdings Ltd., a telecoms network services company. The deal is worth around USD 239 million as the company would be paying $4.50 per share for all Teleglobe’s equity. This price is around 22% premium on the price of the share of the company in the stock market at the closing on Friday.

The company would be also taking up the net debt on the company currently pegged at around USD 61 million. VSNL officials were speaking to media personals at a news conference in Mumbai when they said that the deal would help it rise to the top-3 status in international wholesale voice telecoms, after AT&T and MCI.

The deal led to the VSNL’s New York-listed stock rising around 5% to touch USD 17.71. In the domestic stock market, VSNL stocks gained 4.2% to reach 388.8 rupees, valuing it at about USD 2.5 billion. The company now owned by steel and auto major TATA Group would now have networking access to around 240 countries around the world.

A senior company spokesperson said about this deal: “Traditionally, this is a high-volume, low-margin business, and global scale of traffic and network is required to minimize costs.” the deal is expected to be complete in the coming 6-8 months.