iGate cancels announcement of deal with Patni

New Delhi: IT firm iGate today said it has called off announcement of its "significant corporate development", where it was expected to notify its deal for buying 63 percent stake in Patni Computer Systems.

"The significant corporate development that was set to be announced on Monday is off," iGate said in a brief statement tonight without assigning any reasons.
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A company official when contacted declined to elaborate on the development.

The iGate-Apax consortium, which is tipped to be the front-runner for acquisition of a majority stake in India's sixth largest IT firm, was expected to make the announcement tomorrow.

Patni brothers -- - Narendra Patni, Ashok Patni and Gajendra Patni -- were in talks to sell their 46 per cent stake, while private equity firm General Atlantic was selling its roughly 17 percent holding in the software services exporter.

Patni's promoters and General Atlantic have made several efforts to sell their stake since 2007, which failed because of disagreements between the brothers and the high valuation expectations of the sellers.

The iGate-Apax consortium, which is tipped to be the front-runner for acquisition of a majority stake in the Indian IT firm, had earlier in the day said it will announce a "significant corporate development" on Monday.

Sources in-the-know said the deal was related to the iGate-Apax consortium's estimated $1 billion bid to buy a majority stake in Patni Computer.

The announcement was to have been made by iGate Chief Executive Officer Phaneesh Murthy in Bangalore tomorrow.

A consortium led by private equity firm Carlyle was the iGate-Apax consortium's main rival in the take-over bid, but is understood to have dropped out of the race on account of the high valuation of the firm.

According to industry analysts, the iGate-Apax consortium will pay 500-550 for each share of Patni Computer to be acquired, besides a non-compete fee to the promoters.

On Friday, shares of Patni closed at 476.65 on the Bombay Stock Exchange, up 0.77 percent from the previous close.

Patni, a mid-sized IT services firm, provides solutions to verticals like insurance, telecom, utilities and retail. Patni's revenues for the year ended December, 2009, stood at 1,751.33 crore ($391.79 million, at an exchange rate of 44.70 per U.S. dollar).

iGate's revenues, on the other hand stood at $74.8 million for the quarter ended September, 2010, and $193.09 million for the whole of 2009.

Closure of the deal would mark the culmination of several efforts by Patni's promoters and General Atlantic to sell their stake since 2007. Earlier attempts to sell a stake failed because of disagreements between the brothers and the high valuation expectations of the sellers.

iGate had also expressed interest in buying Satyam Computer Services , after the multi-crore scam perpetrated by founder Chairman B Ramalinga Raju broke out. Satyam has since been rebranded Mahindra Satyam, following its acquisition by Tech Mahindra .