Business

Shareholders to benefit from acquisition: Netsol

NetSol Technologies Limited has said its decision to acquire subsidiaries will improve overall shareholders' wealth.

Ppi July 24, 2010

KARACHI: NetSol Technologies Limited has said that its decision to acquire NetSol Technologies Europe Limited (NTE) and NetSol Technologies North America Inc (NTNA) as wholly-owned subsidiaries will improve overall shareholders’ wealth.

In a letter to the Karachi Stock Exchange (KSE) on Friday, NetSol said that these acquisitions will have a positive impact on consolidated earnings per share of the company because revenues and net profits of the new subsidiaries will be consolidated with results of NetSol Technologies Limited, Pakistan.

The revenues of both these companies approximate around $10 million per annum which will be consolidated with current revenues of the company, resulting in a healthy impact on consolidated net profits.

The company said it would be able to directly launch all new developments, products and marketing activities in North American and European markets through NTNA and NTE, the most developed and matured markets.

“One major issue which we are facing nowadays is reluctance of customers to sign new deals with a Pakistani company due to current geopolitical conditions. Through this acquisition, we will be able to overcome this issue as well, as by signing new deals through these subsidiaries at the end of the day all results will be consolidated with NetSol Pakistan,’’ the letter stated.

Issuance of fresh shares might, for the time being, dilute the earnings of the company, but in the medium to long term earnings could improve due to payout by these subsidiaries, it said.

The proposed transaction will be subject to approval of regulatory bodies. In addition, approval of shareholders will be obtained for the issue of capital other than right shares.

As these approvals will take some time, there will be no immediate dilution of shares, at least for financial results of the fiscal year ended June 30, 2010.

The letter clarified that the parent company, NetSol Technologies Inc, is a strategic investor and main sponsor of NetSol Technologies Limited, Pakistan and it does not have any intention to offload its shareholding in the company.

Published in The Express Tribune, July 24th, 2010.

COMMENTS (1)

Faisal Rasul | 13 years ago | Reply this transaction could be done on equity basis for all share holders apart from the market rate basis. it will hamper the earning of the small share holders who wants the benefit from the investin short term basis. and it will reduce the equity ratio of small share holders. and they didnot display the balance sheet of these to subsidiaries. which is surprising.

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