Private equity firm Blackstone Group has agreed to acquire a majority stake in software services exporter Mphasis from Hewlett Packard Enterprise Co (HPE) in a deal worth up to $1.1 billion (about Rs 7,370 crore).
HPE currently owns 60.50% stake in Mphasis. Blackstone will pay Rs 430 a share to HPE to acquire the stake.
As per India’s takeover norms, this acquisition will also trigger a mandatory open offer for a purchase of additional 26% shares of the company. Based on the open offer subscription the purchase price will range between $825 million (Rs 5,527 crore) to $1.1 billion.
“We are impressed by Mphasis’ strong domain expertise in banking, financial services and insurance verticals. We see large potential going forward driven by Mphasis’ world-class delivery capabilities and its access to Blackstone’s portfolio of companies across the globe,” said Amit Dixit, senior managing director and co-head of private equity in India at Blackstone.
Business from HP Enterprises accounted for a major source of Mphasis’s revenues, but it has been declining over the last few years.
Besides the stake sale, HPE plans to sign a master services agreement with Mphasis for five years. There will also be three automatic renewals of two years each.
Under the master service agreement, HPE has proposed to commit a minimum revenue amount escalating year-on-year and totaling $990 million over the next five years. Mphasis will also be included in HPE’s preferred provider programme, opening up additional revenue opportunities, the company said.
Mphasis shares were trading down 3.3% at Rs 452 on the BSE in late morning trade on Monday.