Japan’s leading information technology services and solutions provider, NTT Data Corporation, has emerged as the most aggressive suitor for Indian software services firm Patni Computer Systems. NTT is in advanced talks with the promoters of Patni Computer to buy their combined 46.5 per cent stake, investment banking sources said.

The Patni brothers — Narendra, Gajendra and Ashok — who have reached an internal agreement to sell their stake, have hired investment management and brokerage company Ambit Capital as adviser for the deal. The promoters are asking for Rs 700 a share, about 18 per cent more than the stock’s 52-week high of Rs 593 recorded last month. This values the promoters' combined stake at about Rs 4,200 crore.

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However, at today's closing price, the premium is over 30 per cent. Patni’s current market capitalisation stands at close to Rs 6,950 crore, and the promoters’ combined stake at today’s rates would fetch around Rs 3,230 crore.

The steep asking price was the primary reason why the other contenders — two Japanese companies, Fujitsu and Hitachi and India’s L&T Infotech — backed out of the race.

The deal, an investment banker said, would help NTT acquire offshoring capabilities and give it a pricing advantage.

A Patni spokesperson said, “We don’t comment on speculation.” NTT spokesperson could not be reached, despite repeated efforts.

An attempt by the two younger brothers and private equity (PE) firm General Atlantic to sell a part of their stake had failed two-and-half years ago because Narendra Patni, who was the executive chairman, was not ready to give up operational control of the company.

“This time, the big advantage is that the three brothers are together on the issue of their stake sale. If they can cross the valuation hurdle, then we should soon hear something,” said another source close to the development.

Besides the three Patni brothers, General Atlantic holds about 18 per cent in Patni, a part of which is through American Depository Receipts (ADRs). The promoter stake declined from 48.3 per cent to 46.5 per cent in September 2009, with Gajendra and Ashok and some of their family members having sold 1.8 per cent stake in the open market.

Merchant bankers said promoters leaving the company was no longer relevant, since Narendra Patni had become a non-executive chairman.

The three bothers continue to be on the board after appointing Jeya Kumar as the chief executive officer in February last year.

Resignation of Anirudh Patni, son of Narendra Patni, in December 2009, also highlights the strong role the management has in running the company.

Meanwhile, IT analysts said Patni would be a good fit for NTT Data Corp, as this would help them scale up faster and give a good customer base.

“A majority of Japanese firms cater to their local market and Japanese firms spread across the globe, after that, they start looking for diversification. Many are now struggling to grow and an inorganic route seems to be the only option. This will give NTT Data scale, India presence, a strong skill base and customers,” an analyst said on condition of anonymity.

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