Shares of Tata Communication slipped 4 per cent to Rs 1,515.50 in Friday’s intra-day trade, after the company announced it will acquire US-based Kaleyra at an equity value of $100 million (Rs 820 crore).
The deal is subject to approval by Kaleyra’s stockholders, certain regulatory approvals, and other customary closing conditions. Upon closing of the transaction, expected in six to nine months, Kaleyra Inc. will become a subsidiary of Tata Communications, the company said.
“With this transaction, Tata Communications will gain an industry-proven platform with strong capabilities and scale. Kaleyra brings a stronghold in the business communications market in banking and financial services, retail and digital commerce industries across global markets, in addition to a strong team with expertise in technology, engineering and research & development,” the company said.
Kaleyra is a global omnichannel integrated communication services provider with a set of proprietary platforms, which offers targeted personalisation through messaging, video, push notifications, e-mail and voice-based services, and chatbots.
That apart, Tata Communications will also assume net debt of $149.9 million in its books. Kaleyra has a topline of $339 million and is loss making at EBITDA and PAT levels.
“However, the near-term investments in capex and opex may dilute Ebitda margin guidance of 23-25 per cent further after Switch acquisition and capex increase to ~$600 million,” the brokerage firm said, maintaining a ‘neutral’ rating on the counter, with a revised target price of Rs 1,450 per share.
“Nonetheless, operating losses (albeit the company is targeting an Ebitda break even in the short term and a double-digit margin in the medium term) will dilute margins in FY25 (earnings dilutive too) and FY26,” the brokerage firm added.