Patni-iGate deal likely on Monday

Patni promoters have called for a board meet in Mumbai the same day.

Promoters of Mumbai-based Patni Computer Systems, will in all likelihood, sign the stake sale deal with iGate and Apax International on Monday, two persons involved in the deal said.

According to sources close to the development, the promoters have also called for a board meeting on Monday. “The announcement will be made after the board meet. So far, it has been scheduled for Monday,” said a source “There were some tax related issues, but those have been sorted out and the deal will be signed soon,” said an official involved in the deal, on condition of anonymity.

The sale announcement was delayed as certain taxation issues cropped up at the last minute, following which iGate had called off the press conference scheduled for January 3.

Founder Narendra Patni along with his two brothers, Ashok and Gajendra Patni, hold 46 per cent stake in the company. Private equity player General Atlantic has 17 per cent shareholding in the company via the American Depository Receipts (ADRs).

The deal, expected to be around $1 billion, will trigger an open offer for another 20 per cent of the shares. Nasdaq-listed iGate-Apex International have also managed to raise a credit line of over $600 million from Standard Chartered Bank, Duetsche Bank and Barclays.

Other than the line of credit, iGate has initiated a process to raise up to $392 million by selling 16 million shares. Moreover, the company has cash on books of around $100 million.

Meanwhile, people close to the deal said the merger will not be immediate.

“It will take at least 90 days through the open offer process after which any serious work will be possible in terms of integration. It is very much like the Tech Mahindra and Mahindra Satyam deals. Before the merger takes place, issues like employee retention and management change will need time to sort out. The go-to-market is something that they can start with but nothing will happen immediately,” said a source close to the promoters on condition of anonymity.

There are also many within the organisation and the industry who feel that Jeya Kumar, the current CEO of Patni, might not continue. “Besides, the question of senior management, too, has to be dealt with.

Many of whom seem unlikely to continue with the company. There is enough time before the merger happens, till then Jeya Kumar will clearly head the company. But in all probability Phaneesh Murthy will head the merged entity,” said a senior official involved in the deal.

Patni’s stock price remained volatile today on the Bombay Stock Exchange. The company’s stock opened at Rs 468 per share, up 1 per cent from the previous close of Rs 463.3.

During the intra-day trading, however, the firm’s stock hit the day’s high of Rs 478 per share, up 3 per cent from the previous close and a 2.1 per cent high from the opening price. Its share closed at Rs 460.1, down 0.69 per cent.

Meanwhile, iGate’s stock on the Nasdaq was at $19.46, on January 6, down 0.46 per cent from the previous close.