CAC Corporation to acquire Chennai's Accel Frontline

CHENNAI: Chennai headquartered IT services company Accel Frontline said it will sell 51% stake to Japan's CAC Corporation.

CAC which is listed in the Tokyo stock exchange will buy 25.2% equity shares held by the current promoters - Accel Limited, Accel Systems Group and NR Panicker, the firm’s chairman. It will pick up another 18.48% through preferential issue of fresh shares costing Rs 25 crore. This would give CAC 43.7 per cent stake in Accel Frontline.

Accel had a market capitalisation of Rs 86 crore on the Bombay Stock Exchange on Monday.

“We would then make open offer for 26%, at Rs 45 per share and this would fetch us around Rs 35 crore,” NR Panicker said at a press conference in Chennai. “There is also a proposal wherein CAC will give a soft loan to the company to enhance long term working capital. Accel would also put back some money into the company to accelerate working capital. So it’s a twin deal.”

The Company will be run as a joint venture between CAC and the AFL and N R Panicker will remain as the executive chairman. However, there would be some changes in the board. “The board will have more people from CAC,” Panicker said.

CAC is looking at expanding its presence in India while Accel is eyeing newer global markets. CAC Corporation was established in 1966 as Japan’s first independent software development company. It specialises in providing services to the banking, manufacturing sectors. It has a market capitalisation of $200 million.

Accel Frontline founded in1991 as Accel Automation, provides IT services to small, medium and large enterprises. The firm clocked revenues of $67 million in year to March 2013, with estimated revenues of $78 million in the current financial year.

On Monday, Accel shares went up 4.87% to close at 35.50 on Bombay Stock Exchange.