E2E Networks shares rallied as much as 5% to hit an all-time high on the NSE today after Larsen & Toubro (L&T) announced to acquire a 21% stake in the cloud services company for ₹1,407.02 crore. Shares of E2E Networks touched a 52-week high of ₹4,977.50 on the NSE, up 5% from yesterday’s close of ₹4,740.50. The stock has surged 900% over the past year, climbing from a low of ₹493.45 on November 9 of last year.

In contrast, shares of Larsen & Toubro (L&T) were under selling pressure, trading 0.65% lower at ₹3,551.30 on the NSE.

As per the deal, the acquisition will be carried out through a preferential issue of shares, encompassing both primary and secondary transactions, according to exchange filings from both companies.

"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 licence agreement, reseller agreement and colocation agreement with E2E Networks," Larsen & Toubro said in its filing to the exchanges.

The acquisition will comprise a 15% stake through preferential allotment and an additional 6% via secondary acquisition. The preferential allotment involves the issue of 29.79 lakh equity shares at ₹3,622.25 per share, totaling ₹1,079.27 crore, which is approximately 24% below Monday's closing price on the NSE.

The secondary acquisition will involve purchasing 11.91 lakh shares from the founder at ₹2,750 per share, representing a 43% discount from the same closing price, totalling ₹327.75 crore.

The transaction is expected to be completed by December 31, and while L&T will hold a minority stake with certain protective rights, it will not acquire control of E2E Networks.

These agreements will allow L&T to nominate up to two directors on E2E Networks' board, which consists of eight members, including three independent directors, as long as L&T maintains at least a 10% stake.

“The strategic collaboration between E2E Networks and L&T marks a significant milestone for the future of adoption of domestically built HyperScaler Cloud Platforms in India. The partnership marks the next step in the journey towards ‘Make in India’ for running production-grade traditional CPU workloads and GPU-led GenAI innovation in India,” said Tarun Dua, MD of E2E Networks in an official statement.

Delhi-based E2E Networks specialises in CPU and GPU-based platforms for large-scale general and AI workloads. The company has strategic alliances with major OEMs, including NVIDIA, Intel, AMD, Microsoft, and Dell, and serves over 3,000 active clients. Notably, E2E Networks is the first company in India to offer NVIDIA H100 and H200 GPUs as services on its public cloud.

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E2E shares surge 5% to hit all-time high as L&T buys 21% stake