New Delhi [India], November 5 : E2E Networks shares surged 5 per cent after the L&T announced it is set to acquire a 21 per cent stake in the company.
Larsen & Toubro (L&T) on Tuesday stated that it is set to acquire a 21 per cent stake in E2E Networks, a cloud services company based in Delhi, the company informed the exchange in a filing.
As per the company statement, the investment will be made through a combination of a preferential allotment and a secondary acquisition. L&T plans to invest approximately Rs 1,407.02 Crore, which includes Rs 1,079.27 Crore for a 15 per cent stake through new shares and Rs 327.75 Crore for a 6 per cent stake from the company's founder.
L&T said "We wish to inform you that the Company has entered into an Investment Agreement on November 5, 2024 for acquisition of upto 21 per cent stake in E2E Networks Limited"
The company also noted that this acquisition is part of L&T's strategy to expand its presence in the rapidly growing fields of artificial intelligence (AI) and cloud services.
E2E Networks, founded in 2009, specializes in providing cloud computing platforms that support large-scale AI workloads, and it has established partnerships with major technology companies like NVIDIA, Intel, and Microsoft.
This move will allow L&T to become a minority shareholder in E2E Networks while gaining certain protective rights, including the ability to nominate two directors to the board.
The E2E Networks has shown impressive growth over the past three years, with operational revenues increasing from Rs 51.87 Crore in FY 2021-22 to Rs 94.46 Crore in FY 2023-24.
The company serves over 3,000 clients across ten countries, making it a significant player in the cloud services market. The acquisition is expected to be completed by December 31, 2024, and will not require any regulatory approvals.
L&T also added that "The Company will not acquire control in E2E Networks pursuant to the proposed acquisition and will be a minority shareholder with certain protective rights".
The shares of the company surged by 5 per cent to Rs 4977.50 at the time of filing this report.