Patni Computer bid in last stage, new owner likely this week

MUMBAI/BANGALORE: A new investor could take charge of Patni Computer Systems by the end of the week after two rival bidders put in their bids, at least two people involved in the transaction said.

The two bidders, a consortium of private equity funds Carlyle and Advent and former Wipro vice-chairman Vivek Paul, and a rival grouping comprising Phaneesh Murthy of iGate, a software services firm, and PE Apax Partners, will submit financial bids early in the week followed by an open offer announcement just before Christmas, the people said.

“There is a high possibility that the deal will be done this week unless there are any loss-of-ownership pangs (felt) by the shareholders,” said one of the two people. General Atlantic is being advised by Credit Suisse while Ambit is advising Narendra Patni.

Offers to buy 62% shareholding in Patni Computer, 46% owned by the Patni brothers and 16% by PE fund General Atlantic Partners, were to be made over the weekend, but the bidders asked for more time, the second person said.

The bids are expected to be near the market price, at around Rs 500 a share or a little above it. Patni shares closed at Rs 482.50 on BSE on Friday.

A banker familiar with the Patni brothers said both the bidders have informally indicated a price in the “Rs 500-per-share range”, but added that the identity of the front-runner was not yet clear. The second source said a deal could go up to even Rs 550 per share.

Once the bids come in, the Patni board will announce the winner, which will be followed by an open offer for 20% more. The outcome may depend on the preferences of GE, the American manufacturing and financial services conglomerate and one of Patni’s largest clients. GE and other long-term Patni clients would have to be comfortable with the new buyer, a person close to the deal explained. iGate, one of the bidders, also counts GE as a large customer.

Another person familiar with the deal said Carlyle has opened a dialogue with GE to press its case. This source said Carlyle has a long-standing relationship with GE globally where the buyout fund had earlier bought out several GE portfolio companies in the past, primarily in aerospace and medical electronics.

Deal may be worth Rs 4,000 cr

If the difference between the two bids is not large, the bidder perceived to be better for the prospects of the company and its employees will win, the same person said. The bid for a 62% stake in Patni could be worth over Rs 4,000 crore. If the Carlyle-Advent-Paul combine triumphs, Carlyle will hold the largest stake. They could retain the Patni Computer Systems logo and name, which are proprietary to the company.

However, if iGate-Apax wins the bid, a reverse merger with iGate, a listed company, is more likely, the people said. Previous attempts by General Atlantic and some of the founder promoters to sell their stake have failed because not all the three Patni brothers wanted to sell out or the asking price was much higher than what potential buyers were willing to pay.