Flextronics buys Hughes Soft for Rs 1,386 cr

Said Arun Kumar, president and managing director of HSS, ‘‘Flextronics, Direct TV Group and Hughes Network Systems have signed an agreement whereby Flextronics will acquire HNS’ entire ownership stake of 55 per cent in HSS.’’

Hughes Network Systems is owned 34 per cent by Rupert Murdoch’s News Corp Inc. The Indian takeover marks Flextronics’ debut in the software business and further consolidates HSS’ software for telecom business, Hughes Network Systems, the parent company announced on Tuesday.

Flextronics’ Asia-Pacific president Ash Bhardwaj said the takeover would prove unique. ’’We are entering a new business domain, a new geography and acquiring a new talent pool apart from new business and a committed new management team, all of which few takeovers do,’’ he said.

HSS’ board will include three Flextronics directors and the brand name and management will remain unchanged. ‘‘It is a good team doing a great job. We will like it to continue taking HSS forward,’’ Bhardwaj said.

HSS’ promoters, who were also one of its largest five customers will also continue to be served. ‘‘HSS has an assurance that they (Flextronics) will continue to remain our major customer,’’ Kumar said.

HNS had always wanted to divest the BPO and software services arm so that it could focus on its telecom domain expertise. HSS will remain listed on the National Stock Exchange and Bombay Stock Exchange even after the takeover transaction is closed. The stock rose from Rs 520 to Rs 531.10 on the BSE on Tuesday.

Flextronics will pay Rs 547 per share and make an additional open offer for 20 per cent (amounting to $82 mn that Flextronics will fund) around June 11 at the same or a higher price. Hughes Network Systems (HNS) is a wholly-owned subsidiary of DirecTV, which was advised by DSP Merill Lynch for the deal.

It has been rumoured that News Corp was trying to transfer its holdings in HSS to a strategic investor since the software business did not match its media and cable business holdings. HSS, specialising in software for telecom companies, had plans to enter the mobile handset and SIP businesses, apart from emerging trends such as 3G and WiFi on platforms including Windows CE, Symbian and mLinux.