Hewlett-Packard, the $73.1 billion technology solutions major, has decided to buy the publicly-held shares of its Indian subsidiary, Digital GlobalSoft Ltd. It will pay the shareholders of Digital GlobalSoft around Rs 1,000 crore (Rs 10 billion) for the shares.

Hewlett-Packard has offered Rs 750 per share. This represents a 50 per cent premium on the average weekly closing price of the Digital GlobalSoft scrip on the National Stock Exchange in the last 26 weeks.

Addressing mediapersons in a live conference call from London, Hans Lidforss, vice-president (strategy and corporate development), Hewlett-Packard, said, "The proposal will allow us to improve the inte       gration of our Indian operations with our global delivery platform, while offering an attractive exit opportunity to public shareholders."

The acquisition will be in accordance with the Securities and Exchange Board of India's new delisting norms, through a shareholder-led reverse book-build process.

The shareholders of Digital GlobalSoft may tender their shares to the buyer at par or above the "floor price" determined by the guidelines, which is the average of 26-weeks' traded price on the NSE preceding the date of the public announcement of the delisting.

"The book-building process will be completed by the end of January. Before this, Digital GlobalSoft will hold an extraordinary general meeting to pass a resolution for shareholders' approval. Besides bringing down operational costs, the initiative will help us to increase our investment through GlobalSoft," Hans added.

Post-offer, Digital GlobalSoft will be a 100 per cent subsidiary of Hewlett-Packard, and will continue to be headed by Som Mittal.

Hewlett-Packard is yet to decide on the appointment of a second-level management for this new entity. It may be noted that Digital GlobalSoft has about 35,000 minority shareholders with about 16.4 million shares to offer.

Nearly 30 per cent of these shares are held by retail investors, including employees of Digital GlobalSoft.

Compaq Computer Holdings Ltd, acquired by Hewlett-Packard in its May 2002 merger with Compaq Computer Corporation, currently holds approximately 50.6 per cent of the fully paid-up equity share capital of Digital GlobalSoft.

On 7 June, 2003, Hewlett-Packard India Software Corporation Pvt Ltd entered into an agreement with Digital GlobalSoft for the demerger and transfer of Hewlett-Packard's services division to Digital GlobalSoft in exchange for issue of shares in Digital GlobalSoft.

Under the terms of the demerger, the Hewlett-Packard group would hold approximately 76.2 per cent in Digital GlobalSoft, based on the latter's current shareholding structure. While the demerger is pending, the company has opted for delisting.