The last promoter purchase was in March end 2020. Only trade recently was an illegal one by some junior employee in finance department made in error it seems
As per today’s filing Majesco has completed most of the formalities and this transaction is likely to complete shortly
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update after a long gap, accumulated and held on tightly till date…this will help me cover losses made in many bad investments made in my 15yrs a fantastic learning experience
currently holding other equity in portfolio and planning frequent interaction on portfolio i hold
Thoma Bravo, L.P. (“Thoma Bravo” or the “Firm”), a leading private equity firm focused on the software and technology-enabled services sectors, today announced that it has completed the acquisition of Majesco (Nasdaq: MJCO), a global leader of cloud insurance software solutions for insurance business transformation. As previously announced on August 8, 2020, under the terms of an amended and restated definitive merger agreement, Thoma Bravo agreed to acquire all of the issued and outstanding shares of Majesco common stock for $16.00 per share in cash.
In conjunction with the closing, Majesco’s common stock will cease trading before the market opens on Tuesday, September 22, 2020 and the Company will no longer be listed on the Nasdaq stock exchange. Majesco will operate as a privately-held company.
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Majesco Board to consider buy back on October 8th meeting
Buyback is maximum 25% of all issued shares. Rest 75% will come by dividends, not so tax efficient? Is delisting being considered?
Key takeaway from conference call.
- Price of 845. Majesco will pay 23% tax on the buyback shares. If you add back 23% to the price, it will come to 1030, which is the price they intend to distribute to the shareholder.
- As the company is paying taxes, the surrendered shared does not have any tax implications in the hands of shareholder—the tax for these shares in already paid by the company.
- Remaining amount (2300 cr) equates to a dividend of Rs 1030 per shares.
- This amount does not include shares of real estate.
- They have an existing building and coming up with new building, which is operational by March 2021.
- The existing building is on lease to Majesco US, and the lease expires in Nov 2020. They are hoping to sign a new deal with them for them in the next few months. As per the management, if the new deal is signed, the property is likely to fetch better valuations.
- Management did not put any price on the real estate, as per my wild guess these properties could fetch around 80 to 100 cr considering the location and prices around.
- Once the real estate is sold, possibly within the next 6 months, they will then file a case with NCLT for the dissolve of the company.
- Once the dividend is distributed, Majesco share will still be traded on the stock exchanges but will reflect real estate value. Considering 2.3-2.5 cr shares, I guess it will trade around Rs 30-50 after the dividend is paid (which equates to real estate value of 80-100 cr)
- As such, the stock could be utilised by some shareholder to book capital losses (buying at 800 plus at current price and then selling at 30 if that is the price it settles after declaring dividends)
Note- Own shares of the company and above numbers are approximate. Please refer to company presentation for details.
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@paragbharambe- so is there still an arbitrage if u buy and hold on for dividend (and book cap losses later ?) buy at 880 and get 1030 dividend ? Or am I missing something ?
Hi Parag, do you mean to suggest that the stock price will crash from CMP to 30 - 50 levels (with so many down circuits 
) ? That was my biggest worry actually 
.
Very nice dissection of number. Why company has taken this round-about route to distribution of sale proceeds?
This process gives promoters time to play around with shareholders money. They could have straight away distributed the money as dividend to shareholders, why this 25% buy-back and remaining 75% as dividend. This does not make any sense to me.
Buyback is more tax efficient (23%) as against dividend (marginal tax rate). Unfortunately under COmpanies Act there is a limit to buyback. Hence the need for this current structure.
Disclosure: recently exited this scrip
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This is as per SEBI rules. The company can buyback only 25% of their paid up capital. Majesco management has made id clear in last quarter (Q1) con call.
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I am not able to figure out exact valuation. But if you buy 100 shares of Majesco at 880 today, you will get
1- 25 shares will be bought back by Majesco at 845 and they will be tax free to you.
2- Remaining 75 shares you will get 1030 per share.
3- Additionally shareholder will retain 75 shares and entitled to further cash when the company dissolve (if they choose to).
And the best part of it, other than real estate valuation, buy-back and dividend are certain things, no uncertainty.
I am not exactly sure how the price will come to 30-50 level (I am just making a wild guess that the price will come to 30). However if Majesco distribute 3000 + cr of money to shareholders using buyback and dividend, the remaining valuation of the company shall reflect to what is residual assets- real estate in Majeco’s case. The price may come to 30 level (for example) but that is after you surrender your 25% share @845 and then getting 1000 per share as dividend. In my view that is not a bad outcome.
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A question is - if you dont tender shares in buyback, then you’ll get the 1000+ as dividend on all shares, ryt?
Yes, there might be some tax leakage at your end, but you’ll get 1030 on all shares, ryt? Plus the residual value afterwards. Is the understanding correct?
I would say yes. Essentially, buy back and divided are one and the same things. Either you get 845 after tax or you get 1030 and pay tax.
If you hold shares, residual value of say Rs 30-50 you will get, but timing it not certain. It may take 3 months or it may also take 12 months depending upon how the NCLT process goes for Majesco.
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Is there any cut off date announced for Dividend payout?
HI
Can anyone please confirm the cut off date. Not able to find in the Board Meeting. Majesco_Board.pdf (1.4 MB)
Regards
Disc: Invested <1 % portfolio
Continuing on my earlier analysis; has anyone analyzed what will be the tax implications for the special dividend that will be paid post buy-back. I blv as per this assessment year, there will be a TDS on dividend and the dividend will be taxed as per IT slab.
Yes- here’s how it looks like. Feel free to correct. Dividend at tax slab rates. and if u sell the shares post dividend - u will get a STCG loss u can use.
So if ur in the 30% bracket- it doesnt make sense if u buy shares today at 880 as u will pay 300 rs in tax.
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Post buyback the value remaining should increase from ~1030 to ~1290 because share quantity will be 75% of pre buyback numbers. Is my assumption right? Will the share price increase to reflect that. CMP ~880 is higher than buyback price of 845.
Dividend will make sense only for people in 5% slab. If one has LTCG they should sell since it is taxed at 10% in excess of 1lakh. Even STCG at 17% is better than ~23% company is paying for buyback.
I strongly feel delisting would be a better balanced in terms of cash distribution and taxation.