Patnis may get premium over NTT’s offer to GA

MUMBAI: The three Patni brothers, who co-founded and promoted the country’s sixth-largest software exporter, Patni Computer Systems, may get a premium for selling their stake to Japanese strategic investor NTT Data Corp, as compared to private equity firm General Atlantic, said a person with knowledge of the matter. NTT Data is close to acquiring a controlling stake in Patni Computer and is in discussions with its major shareholders that include GA and the brothers.

GA holds a shade below 18%, while the Patni brothers, Ashok, Narendra and Gajendra Kumar Patni, together hold 46.54% in the software exporter. The brothers’ stake is important to NTT if it wants management control of the company. The Patni brothers could get an additional Rs 50 per share or a 7-8% premium compared to GA, the person said. GA had invested in Patni Computer in 2002.

With General Atlantic’s 17.7% stake and another 33% from the Patni brothers, NTT can acquire a 51% controlling stake in the firm. Investment banking sources said NTT was likely to pay between Rs 650 and Rs 700 per share Patni Computer, valuing the company between Rs 8,400 crore and Rs 9,000 crore. The Patni brothers did not respond to a query from ET, requesting a confirmation.

Even last year, before the talks with NTT and L&T Infotech reached an impasse, the three brothers had asked for a premium valuation compared to GA. They had presented a united front to potential buyers and same is the case now. If the transaction happens, the PE firm is expected to sell its entire stake while each of the Patni brothers is expected to retain a low single-digit percentage in the firm.

Shares of Patni, which surged 10% on Wednesday, following news of a possible deal with NTT and an open offer to the shareholders, lost some of their gains on the following days. On Friday, the Patni stock fell 5% from its previous close to Rs 560.25 as the BSE-IT index lost 2.3% on worries of the Greece crisis spreading to the rest of Europe.

Analysts had rated the growth prospects of the company positively in comparison with its peers following its March 2010 quarter performance.