Patni-iGate deal may be announced today

iGate on Sunday said it may hold a press conference today to announce the deal to acquire Patni Computer Systems. According to CNBC-TV18, the deal may be sealed at around $1 billion, including the mandatory open offer.

The Patni promoters and General Atlantic (GA) will sell 62.8 per cent stake in Patni, which iGate will acquire after the deal closure. The deal is likely to be signed at Rs503 per share.

Patni's founders, who hold 46 per cent in the company, and private equity player General Atlantic, which holds 17 per cent, are planning to exit the company. iGate is seeking to buy the stake together with private equity player Apax Partners.

The Patni board is expected to meet today to approve the sale to iGate. Legal and tax details will be finalised in the board meeting. The Patni family will pay taxes in the US and India after the deal closure.

iGate will also make open offer for a 20 per cent stake in Patni after the deal. iGate will fund the deal via equity and debt. StanChart and Deutsche Bank are likely to lend $600-700 million. Apax Partners will fund part of the deal through debt convertible to equity.

But iGate was understandably cautious on Sunday, considering it had to call off a press conference scheduled for 3 January that was meant to announce the deal. The company's representative called up the media to say that iGate chef executive Phaneesh Murthy may address the press at around noon on Monday.

Though no reasons were given for last week's conference being called off, it was speculated that some Patni promoters, at the last minute, raised questions about taxation issues related to the deal. These issues are now said to have been sorted out.