In or out? iGATE fiddles in one-horse race for Patni | business | Hindustan Times
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In or out? iGATE fiddles in one-horse race for Patni

business Updated: Jan 02, 2011 22:12 IST

A consortium led by iGATE and venture capital firm Apax Partners is expected to acquire a controlling stake of 63% in Patni Computer Systems, but new questions loomed on Sunday.

Executives of both Patni and iGATE Corp were tight-lipped over any such buyout, but iGATE CEO Phaneesh Murthy suddenly called off a scheduled a news conference in Bangalore on Monday to announce a “significant corporate development” in the backdrop of negotiations to take over the company.

It was expected that finer details of the said Patni buyout would be spelt out during the event before it was called off.

The iGATE-Apax team had been competing with another consortium of private equity firms, Carlyle and Advent, along with Vivek Paul, the former vice chairman of Wipro to buy out the mid-sized IT services that was a pioneer along with Tata Consultancy Services in outsourced software work that put India on the global map.

The Carlyle-Advent team is believed to have opted out of the bidding war citing higher price quoted by Patni promoters. That left the iGATE-led team as the sole bidder in the fray for Patni acquisition. iGATE-Apax is expected to offer Patni R500-R550 per share, valuing Patni at around R4,500 crore.

“The Patni brothers have been looking to sell their stake for quite some time but were unable to get the right valuation. This time, however, the valuation is better and they are keen to sell their stake,” an analyst told HT, requesting anonymity.

The Patni brothers, Ashok Kumar, Gajendra Kumar and Narendra Kumar own about 46% stakes in the company while private equity firm General Atlantic that holds another 17%. This entire 63% stake is up for sale as both Patni brothers and General Atlantic want to sell off their respective stakes.

Patni shares closed at R476 on the BSE on Friday, up 0.77% from the previous close.