Tata Communications to acquire U.S.-based Kaleyra for $100 mn; stock down 4%

Shares of Tata Communications, a subsidiary of Tata Group, were on focus on June 30, a day after the company said that it will acquire U.S.-based Kaleyra Group for $100 million in an all-cash transaction. Following the development, the share price of the company plunged as much as 4.2% to hit an intraday low of ₹1,515.50 apiece on the BSE. This is in contrast with the broader BSE index, which was trading higher by 0.84% or 534.71 points at 64,450.31.

Tata Communications shares opened a gap-up at  ₹1,588.50, higher by 0.4%, as against the closing price of the previous session at ₹1,582.10. However, it soon plunged 4% in the early trade. At the time of reporting, shares of Tata Communications were trading 1.77% lower at ₹1,554.05. At current level, shares of Tata Communications are trading 7.17% lower than the 52-week high of ₹1,673.95, which the company touched on June 14. The share price of Tata Communications is trading at 71.6% higher than the 52-week low that the company touched on June 30, last year. During the session, the market capitalisation of Tata Communications stood at ₹44,326.05 crore, with 23,645 shares exchanging hands on the BSE, as against the two-week average of 0.26 lakh shares.

According to Tata Communications, the proposed transaction will provide a direct opportunity for the company to expand its CPaaS (Communication Platform as a Service) business on a global scale, as well as expand its leading presence globally. The transaction is expected to be completed within 6-9 months, said the Tata Group’s subsidiary.

“The consideration payable to the shareholders of Kaleyra Inc. is equal to $7.25 per share of Kaleyra common stock. The aggregate consideration is expected to be around $100 million, as may be adjusted by any payments required to Kaleyra warrant holders or holders of restricted stock units which vest upon change of control. Additionally, Kaleyra Inc. will be acquired with debt in its books. Kaleyra Inc. has a gross debt of $224.9 million and net debt of $149.9 million as on March 31, 2023,” Tata Communications said.

Kaleyra Inc. is an enterprise company that provides mobile communication services to financial institutions, e-commerce players, OTTs, software companies, logistic enablers, healthcare providers, retailers, and other large organizations worldwide. The products offered by Kaleyra include multi-channel integrated communication services, consisting of messaging, rich messaging and instant messaging, video, push notifications, e-mail, voice services, and chatbots. Kaleyra currently has over 1,600 operator connections in 190+ countries, including all Tier-1 US carriers. Kaleyra had a consolidated revenue of $339.17 million for the 12 months period ended December 31, 2022.

The development comes a month after Tata Communications Netherland BV completed the acquisition of the US-based The Switch Enterprises LLC  for $58.8 million on May 1, this year. Through the acquisition, the company aims to gain a strong foothold in the US media and entertainment market by extending its portfolio into live video production.