iGate in talks to acquire Patni Computers
02 Dec 2010
IGate Corp, the California-based information technology services firm headed by former Infosys Technologies executive Phaneesh Murthy, saw its shares plunge by over 20 per cent on Tuesday on concerns of integration with a rival double its size.
Igate counts GE among its top customers, and is in talks with promoters of Patni Computer Systems for a potential acquisition.
While for iGate chief executive Murthy, the Patni acquisition will mean joining the billion-dollar club of India-based software exporters, not all investors and experts tracking the company see it that way.
The three Patni promoters, who hold about 46 per cent in the company, along with private equity firm General Atlantic (GA), are in advanced stage of discussions with iGate, which is backed by Apax Partners. GA holds around 17 per cent stake in Patni.
Apax plans to invest $400-500 million in a special purpose vehicle to be formed with iGate for funding the acquisition, according to a report.
With around $700 million a year in revenue, Patni is more than double the size of iGate and both companies share GE as their common customer. Bank of Canada, the biggest customer for iGate, accounts for nearly 30 per cent of its revenues.
