Stock Market Today: E2E Networks' share price rose 5% to its upper circuit limit on Tuesday, November 5, after the company announced that engineering and infrastructure major Larsen & Toubro (L&T) would acquire a 21% stake in the company.
“The company proposes to acquire a total of 4,171,410 equity shares of E2E Networks (comprising an aggregate 21% of the capital),” L&T said in an exchange filing earlier today.
L&T will be allotted 2,979,579 preferential shares of E2E Networks, representing a 15% stake, at ₹3,622.25 per share, amounting to a total investment of ₹1,079.27 crore. Furthermore, it will acquire an additional 6% stake, comprising 1,191,831 equity shares of E2E Networks, from a founder at ₹2,750 per share for ₹327.75 crore.
Following this transaction, L&T will be a minority shareholder in E2E Networks with certain protective rights. The construction major will also have the right to nominate up to two directors on the board of E2E Networks, which consists of eight directors, three of whom must be independent.
The all-cash deal is expected to be completed by December 31, 2024.
E2E Networks operates as an infrastructure cloud and AI/ML/GenAI cloud platform, offering GPU-as-a-service solutions tailored for mid-sized enterprises, startups, research institutions like IITs and IIITs, and fintech firms across 10 countries.
The company has strategic alliances with major OEMs, including NVIDIA, Intel, AMD, HPE, Microsoft, and Dell.
“The acquisition is complementary to the market approach in the fast-growing areas of AI and cloud services. Along with the acquisition, the company also proposes to enter into a software license agreement, reseller agreement, and colocation agreement with E2E Networks,” L&T said in an exchange filing while explaining the rationale behind the acquisition.
E2E Networks' share price saw strong buying momentum following the announcement of L&T’s stake acquisition. The stock jumped 5% to its upper circuit limit on the NSE.
E2E Networks is a multibagger stock and has provided phenomenal returns to investors. The stock has surged from ₹493.5 to ₹4,977.5 per share in the last year, offering 871% returns. Over the past six months, it has rallied 341.5%, and in the last three months, it is up 186%.
During the last month alone, the stock has surged over 61%, defying broader market weakness.
Meanwhile, L&T's stock was trading flat with a negative bias at ₹3,562.30 on the BSE around 10:40 am today.
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