Smartlink sells DigiLink to Schneider Electric in $112-million all-cash deal

02 Apr 2011

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Mumbai-based Smartlink Network Systems has sold its structured cabling business, Digilink, to Schneider Electric India, in a $112-million all-cash deal.

Schneider Electric India is a fully-owned subsidiary of the French electrical equipment maker. DigiLink business contributed $34.7 million, which amounted to 90 per cent of  Smartlink's revenues in the calendar year 2010.

According to KR Naik, executive chairman of Smartlink and the largest majority shareholder, the deal had allowed the company to exit a declining business while providing the required cash to invest in its most promising segments such as active networking products under its new brand DigiSol, and after-sales services and support under its DigiCare brand.

Naik told CNBC India in an interview that DigiSol was the company's next big thing and in less than a year had become number two. He added the company's future growth would come from DigiSol.

Insisting that he had made no money in the transaction, he said all its proceeds would get ploughed back into the business.

Analysts, though, remain sceptical and although the company sold its core business it did not sell any of its own shares, so an open offer to minority shareholders was ruled out.

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