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Leading Edge plans US acquisition

Feb 12, 2000

Leading Edge Systems (LES) is to announce the acquisition of a US based software company. The potential acquisition has a turnover of $ 8-10 million. LES is engaged in software development and focuses on the telecom, mail order, retail, finance, insurance and entertainment sectors. The company took over the Suresh Rajpal promoted ECapital two months back.

The combined equity has a total of around 450 employees and Chase Manhattan holds a stake of 31% in the company’s Rs 150 million equity. LES is targeting a turnover of around $ 21.5 million for FY 2000 and $ 40 million for FY 2001.

The acquisition would definitely help LES achieve its target and further boost its market capitalisation (which stands at Rs 30 million). The acquisition is likely to be in the domain areas, which LES caters to.

What is however not known whether the company would give out stock to the shareholders of the acquired company or whether the payment would partly in cash.

However, the company would have to think of a listing on the Nasdaq if it were to offer stocks to its US employees. On its part the management has said that it could think of a listing on the Nasdaq as and when it needs the money though they don’t need it right now.

Market View:
Analysts have rated the stocks a buy, primarily for its management quality, since Suresh Rajpal is rated as a top–notch manager within the infotech industry. Secondly, the domain sectors that the company is targeting are high growth areas and the company seems to have the wherewithal in terms of the resources, to participate in its targeted sectors’ growth.

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