iGate acquires majority stake in Patni Computers | india | Hindustan Times
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iGate acquires majority stake in Patni Computers

IT services firm iGATE Corp on Monday announced it would acquire mid-sized rival Patni Computer Services in an estimated $1.22 billion (Rs 5,500 crore) reverse merger that would put the combined entity within kissing distance of the big league of Indian software. HT reports. Software's Indian Premier League

india Updated: Jan 11, 2011 00:21 IST
HT Correspondent

IT services firm iGATE Corp on Monday announced it would acquire mid-sized rival Patni Computer Services in an estimated $1.22 billion (Rs 5,500 crore) reverse merger that would put the combined entity within kissing distance of the big league of Indian software.

Teaming up with private equity firm Apax Partners, $700 million in debt and management strength symbolished by CEO Phaneesh Murthy – the former global sales head of Infosys – the US-Indian iGATE stitched a deal expected to give it big contracts based on trust built by its size.

iGATE is acquiring a majority stake in a company twice its size on major parameters.

Patni has 16,556 employees, 282 customers, 22 global delivery centres, and offices in 30 locations worldwide, and reported 12-month revenues of $689 million (Rs 3,100 crore).

iGATE has 8,278 employees, 82 customers, seven global delivery centres, and offices in 16 countries, with 12-month revenues of $252 million (Rs 1,100 crore) as on September 30, 2010.

“It has been our stated intent to scale revenues, customers, and expand our vertical
capability,” said Murthy, who will now run the company that Infosys chairman NR Narayana Murthy left to form Infosys nearly three decades ago. The two are not related.

Gaurav Dua, head of research at Sharekhan said “iGATE and Patni stands good chance of getting bigger in near future in terms of business than Mahindra Satyam, as the latter is still struggling.”

Patni brothers — Narendra, Gajendra and Ashok — will sell their combined stakes of 45.6% at Rs 503.5 per share to the iGATE-Apax consortium, which would also buy another 17 % held by equity firm General Atlantic Partners at the same price.

The 63% will cost Rs 4,400 crore for iGATE-Apax, which would also make an open offer at the same price as required by regulatory law to minority shareholders of Patni to buy 20.6% which would take the total deal value to Rs 5,500 crore.
Patni shares closed at Rs 464 up 0.82% on Monday.

iGATE, now a subsidiary of a US company which de-listed from Indian bourses in 2008, clarified that it is not paying any separate non-compete fee to the Patni brothers.

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