EDS acquires majority stake in MphasiS

EDS, a global technology services company, has acquired a majority stake in Mphasis BFL Limited, an applications and business process outsourcing (BPO) services company based out of Bangalore.

Stephen R Heidt, EDS vice president, business workforce and capacity management, told reporters here on Thursday that more than the required 83 million shares of MphasiS had been tendered in response to EDS' conditional offer of Rs 204.5 per share.

Total consideration for the transaction that gives EDS a majority stake in MphasiS is approximately $380 million in cash. The transaction was expected to be completed by the end of June, subject to the administrative settlement procedure, he added.

Post acquisition, India will be the second largest employee location for EDS after the US, with a combined strength of 14,000 employees.

Presently, out of Mphasis' 12,000 employees, 11,000 are based out of India. Heidt said that with the addition of MphasiS and the present expansion plans, EDS' total workforce would exceed 20,000 by the end of calendar year-end.

Jerry Rao, who will continue in his present capacity as the CEO of MphasiS said, "EDS' majority ownership will give MphasiS access in leveraging a variety of areas where we don't have competencies and EDS has complimentary compitencies."

He said this would help MphasiS expand its global footprint apart from giving it the expertise to offer the clients infrastructure outsourcing services, in addition to the present application services and BPO offerings.

EDS, which had a revenue of $19.8 billion in 2005, has approximately 16,000 employees in 27 countries including 3000 in India. MphasiS will continue to operate with its present management team and company name following the completion of the transactions.

The company would appoint a majority of the MphasiS directors and was evaluating the consolidation of its existing operations with MphasiS.

Earlier, Baring India Investment Ltd, the investment bank had sold 56,014,184 shares aggregating to 34.73 per cent of the share capital of Mphasis Bfl Limited, in response to the offer made by EDS Corporation.

In a similar submission to open offer on May 27, Jerry Rao, chairman and managing director, MphasiS had sold 18.75 lakh shares of the 64 lakh shares of the firm he held in response to the offer, earning about Rs 38 crore.