HCL Infosystems denies media report of talks over stake sale to Lenovo
28 August 2012
HCL Infosystems, the listed subsidiary of India's leading IT services and technology company HCL Corporation, today denied an Indian media report that it is in talks to sell a 50.1-per cent stake in the company to Lenovo Group Limited.
Citing senior officials at Lenovo and investment bankers familiar with the development, hyderabad-based The Financial Chronicle, part of the Deccan Chronicle group today reported that Hong Kong-listed Lenevo, the world's second-largest personal computer maker, is in talks to buy a controlling 50.1-per cent stake from the promoters in HCL Infosystems, for about Rs500 crore ($90 million).
HCL Infosystems has promoter shareholding of 50.77 per cent, with HCL Corp being the single-largest promoter with 42.85 per cent stake.
The report sent the Noida-based company's shares as high as 23 per cent to Rs44.75 in early trade on the Bombay Stock Exchange and up by 23.65 per cent to Rs44.70 on the National Stock Exchange.
Founded in 1976, HCL Infosystems has recently struggled after a decline in its market share in the domestic personal computer business. It also distributes Nokia mobile phones, which has lost its top global market share to South Korea's Samsung.
For the three months ended December 2011, the company reported consolidated revenue of Rs2,693 crore, a decline of 15 per cent over the same period last year, while net profit declined by 38 per cent to R35 crore.
But since it recently bagged a 7-year Rs2,200 crore contract to manage India's Unique Identification Number scheme for Indian citizens, the Indian government would not approve a stake sale in the company to a Chinese vendor.