US-based iGate Corp today officially announced that it has acquired a majority stake of nearly 63 per cent in Patni Computer Systems, India's sixth largest information technology firm, for $1.22 billion (Rs5,533 crore). (See: Patni-iGate deal may be announced today)
The deal was widely anticipated; the companies delayed an earlier announcement because the finer details of the deal had not been fully worked out (See: iGate - Patni deal stalls).
iGate, backed by funding from Apax Partners LLP, will pay about $921 million to buy 63 per cent of Patni from the founding family – the brothers Narendra, Gajendra and Ashok Patni - and General Atlantic LLC, followed by an open offer to acquire a 21-per cent stake for about $301 million, iGate said in a statement. The price of Rs503.50 a share is 9.4-per cent higher than Patni's closing price on 7 January.
The acquisition would enable the Fremont, California-based iGate, which vied with Carlyle Group for control of Patni, to add clients and expand in India after dropping out of the race for Satyam Computer Services Ltd in 2009. If the open offer succeeds, it would complete the biggest acquisition of an Indian technology company.
The market was not particularly impressed by the deal. ''You have a company that's far smaller, two and a half times smaller than Patni, acquiring it," said an analyst at Indiabulls Securities Ltd. "What does it bring to the table? Nothing, they are very similar companies.''
IGate plans to fund the purchase via existing cash, raising debt and selling as many as 10 million shares, it said.