Tech Mahindra To Acquire Majority Stake In Perigord; Stock Jumps

Tech Mahindra Ltd. ended among the top performers on the Nifty 50 after the software services provider approved a proposal to acquire a majority stake in Perigord Asset Holdings Ltd.

Tech Mahindra plans to acquire 70% equity shares in the Ireland-based BPO services company directly and indirectly through its wholly owned subsidiary, Mahindra Engineering Services (Europe) Ltd., according to an exchange filing.

Tech Mahindra will acquire the Indian subsidiaries of Perigord — Perigord Data Solutions India Pvt. and Perigord Premedia (India) Pvt. Mahindra Engineering will acquire the other legal entities of Perigord.

The 70% stake acquisition will be done through a cash consideration of 21 million euros, which will be paid upfront. The remaining 30% shares will be acquired over the next four years, at a valuation linked to the financial performance of the company, the filing said.

The company expects to close this transaction by Friday, March 19, 2021.

“Life sciences is an emerging opportunity and this is a different sort of acquisition that they have made,” Avinash Gorakshakar of ProfitMart Securities, told BloombergQuint over the phone. “The one good thing about Tech Mahindra is that they have managed to absorb their acquisitions very well over 12-18 months period. So while this appears to be a good acquisition, I will await more details on the kind of customers they will cater to along with the financial opportunity that it presents.”

Perigord, specialising in end-to-end packaging supply chain solutions for the life sciences industry, reported a revenue of 19.5 million euros during the financial year ended Dec. 31, 2020. The company has more than 380 employees, the filing said.

Shares of Tech Mahindra ended 2.3% higher at Rs 1,026.6 apiece — the highest in two months. The stock has gained in four of the last five trading sessions. Of the 47 analysts tracking the company, 39 have a ‘buy’ recommendation, five suggest a ‘hold’ and three recommend a ‘sell’, according to Bloomberg data. The average 12-month consensus price target implies an upside of 8.3%.