Patni, iGate deal to be finalized on Monday?

BANGALORE, INDIA: Nasdaq-listed iGate Corporation will buy 60 per cent stake in Patni Computer System and a definitive agreement in this regard would be singed on Monday, The Economic Times reported on Friday.

The report, citing three people with direct knowledge of the development, said that iGate would buy the equity from the founders of Patni as well as private equity investor General Atlantic.

Earlier, a Reuters reports had said that a consortium of Apax Partners and iGate are close to buying 63 per cent of Patni Computer, in a deal valued at about $915 million.

The Apax-iGate consortium has offered about 500 rupees a share for the stake, the report said citing a source.

According to the ET report, iGate will make an open offer to Patni shareholders according to the norms of the Securities and Exchange Board of India (SEBI), the capital market regulator. The board of Patni Computer Systems will meet on Monday to approve the transaction as well as the open offer, the people said.

iGate CEO Phaneesh Murthy is currently in India to close the deal, the report added.

The likely acquisition of Patni Computers by iGate will help the combined entity catapult into the billion dollar revenue league. This augurs well for the combined entity as economies of large-scale operation will result in the new entity bidding successfully for larger IT outsourcing contracts whilst improving the margins for the company in the next 12-24 months.

With IT outsourcing contracts in an upswing in the next 6 months, the combined entity can look forward to bagging large outsourcing contracts in the next 12 months, according to analyst firm Datamonitor India.