EDS offers $380 million for 52-per cent stake in MphasiS

13 April 2006

Electronic Data Systems (EDS) has made an all cash conditional open offer of Rs204.5 ($4.58) a share for 83 million shares of Bangalore-based applications and business process outsourcing (BPO) services company MphasiS BFL Ltd. The offer represents a 30-per cent premium to Mphasis stock's 26-week average price.

The offer is contingent upon EDS acquiring the 83 million shares, representing approximately 52-per cent of current shares outstanding. The deal, if it materialises, would amount to $380 million (over Rs1,700 crore) for a 52-per cent stake in Mphasis. Analysts consider the offer below the market value of Mphasis.

Baring Private Equity Partners (India) Ltd., which holds 35-per cent stake in MphasiS, is likely to sell the stake to EDS in the open tender, if it materialises.

EDS had $1.9 billion in cash and cash equivalents as of December 31, 2005. It has set April 25 deadline for any competitive bids and says that it retains the right to revise the offer price or the number of shares till June 1.

The offer managed by Citigroup would be open between May 22 and June 12.

In a departure from the joint venture route to establish a presence in India, EDS has opted to attempt buying an Indian company.

According to Mike Jordan, chairman and CEO, EDS, the offer was complementary to EDS' overall strategy to enhance its presence and capabilities in India.