Birlasoft, a digital business IT services company owned by the CK Birla Group, has joined forces with KPIT Technologies, which focuses on IT consulting and product engineering.
The “unprecedented transaction” involved “a merger, de-merger, a listing, multiple open offers by different acquirers for different companies at different points of time, and complex option arrangements”, said Ashwath Rau, a partner at AZB & Partners, which advised KPIT.
“The intent of the parties was for Birlasoft to become promoters of KPIT (along with other KPIT promoters), combine Birlasoft’s business with KPIT, and then create two separate companies [following the de-merger of KPIT’s engineering business],” explained Rau.
“Given various commercial objectives of the parties and KPIT being a listed entity, the deal involved complex structuring issues and documents within the contours of the SEBI [Securities and Exchange Board of India] regulations, to achieve the objective.”
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Initial discussions for the deal began in July 2017 and took more than six months to complete due to the structuring involved. AZB & Partners worked directly with KPIT’s business team led by Kishor Patil, the company’s co-founder, managing director and CEO, along with Sunil Phansalkar, general manager and head of investor relations.
Khaitan & Co advised Birlasoft on the open offer by the promoters of KPIT and Birlasoft to KPIT’s public shareholders to acquire up to 26% of KPIT’s share capital, and on the merger of the two companies. The firm also assisted with drafting, negotiating and finalizing the transaction documents, as well as offering advice on tax, competition and limited merger-related aspects, as well as limited due diligence.
“The structure for this transaction went through multiple iterations and had to be tested against various parameters prescribed in SEBI’s recent circulars on schemes of arrangement involving listed entities, the SEBI Takeover Code and treatment of mergers and de-mergers under the Indian Accounting Standards,” Niren Patel, a partner at Khaitan & Co, told India Business Law Journal. “The team [also] had to address various demands from a commercial perspective while ensuring that the structure balances the client’s business and commercial needs.”
Patel said the firm had advised Birlasoft on a number of post-merger integration issues including employee stock ownership plans, material contracts, regulatory approvals and compliance, brand name and management, and governance of the combined and separated businesses.
Khaitan & Co worked closely with several in-house teams of the CK Birla Group and Birlasoft while also representing Birlasoft’s promoters – National Engineering India and Central India Industries.
Madhav Rao Uppuluri and Sanjeev Bharwan led the in-house teams at CK Birla Group and Birlasoft, respectively. CK Birla Group CFO Tes Varadhan and senior general manager Megha Jain led the finance team, while Birlasoft CEO Anjan Lahiri and COO Dharmendra K led the business team.
The transaction will close once the companies obtain regulatory approval from the Competition Commission of India, the National Company Law Tribunal and other bodies, and following completion of the open offer made to KPIT’s minority and public shareholders.
The core transaction team at Khaitan & Co, in addition to Patel, consisted of partner Haigreve Khaitan, principal associate Ashraya Rao, senior associate Saswat Subasit and associate Aparajita Chakraborty. Along with Rau, AZB’s team comprised partners Kashish Bhatia and Rahul Rai, and senior associates Medha Marathe, Pranav Atit, Rahul Satyan and Gaurav Bansal.
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