For a group that is as big and versatile as Essar, it could seem simple and smooth to achieve an acquisition like that of AGC Networks. Simple and smooth it was for Essar Group that has its presence in more than 13 business sectors to purchase AGC Networks; which also is a pioneer in the Enterprise Communication Solutions business. Essar has finally concluded the buyout wherein the acquisition contract amount came up to Rs. 288 crore.
The deal had apparently begun in the month of May, whereby Essar had plans of taking over the entire stake of 59.19% worth Rs. 205 crore that Avaya held in AGC Networks which enjoys the status of being publicly listed. US-based Avaya which also is a leading enterprise communications solutions provider, previously owned and managed the Indian (Gurgaon) based AGC Networks and was known as Avaya GlobalConnect. Essar not only bought the 59.19% stake but also extended it to 79.13 per cent by spending an extra Rs. 83 crore other than the original cost of Rs. 205 crore.
Legally the acquisition took place through Essar Capital Finance (ECF) and Essar Services Holdings (ESHL) who played the role of persons in concert. Essar has no intentions of amalgamating its name with the acquired firm, rather the idea is for AGC to be run and managed with the same brand name as AGC Networks. The major move from Essar though, comes in the form of revamping the entire board of AGC Networks after having the managers of Avaya make an exit from their primary roles. S K Jha is now the Managing Director along with Anil Nair playing the role of Joint MD. The other board members shall include Anhuman Ruia, promoter-director from Essar, Sengupta, and Jha.
Under the flagship brand name of Avaya, AGC Networks was seen as an expert in the field of customized communication business solutions and its major source of revenue came from Systems Integration (SI). Essar’s motive behind the acquisition was this exact reason, wherein Aegis a sub-brand of Essar Group, which already has its presence in several countries in the field of systems integration, can gain an added advantage. The strategy here would be to cross-sell AGC’s services to Aegis‘ existing consumers and in addition to this, AGC which currently operates in Australia and India will expand globally.
Essar as a group is undergoing burgeoning growth and this should easily run shivers down the spine of competitors in various sectors. Here is a glance at what is already under Essar’s kitty and its plans for the future -
• Essar’s acquisition of Trinity Coal
• Essar Group’s Aegis looks at European markets and hunts for more acquisitions.
• ESPL restructures its operations for better capital flow.
• Essar to hire Café Coffee Day’s Aloke Gupta to ideate and drive Essar’s retail vision.
By this, it becomes evident that Essar has and will undergo tremendous development and growth. However, it is also a must for Essar not to be complacent in initiating deals and falter in any of its future business projects.
