WASHINGTON (dpa-AFX) - Information technology company iGATE Corp. (IGTE) Wednesday announced its plans to delist Indian unit Patni Computer Systems Ltd (PTI) from the US and Indian exchanges, in order to acquire a full stake in it. Following the news, Patni shares gapped up sharply and currently trading nearly 9 percent on the New York Stock Exchange.
iGATE plans to begin the delisting process through two of its subsidiaries, Pan-Asia iGATE Solutions and iGATE Global Solutions Ltd, and is to arrange debts of about $215 million to fund the acquisition, which will be done through a reverse book building process.
iGATE will offer shareholders a minimum of 356.74 Indian rupees per share or $7.04 per share. This is lower compared to Patni's close on Wednesday at INR 388.85 on the National Stock Exchange, and INR 358.50 on the Bombay Stock Exchange.
In January 2011, iGATE agreed to acquire an 83 percent stake in IT services and BPO company Patni Computer Systems Ltd for $1.22 billion.
iGate inked deals with Patni's three founders, and private equity firm General Atlantic, to acquire their 45.6 percent and 17.4 percent stakes, respectively, for a total of $921 million. Further, in keeping with regulatory requirements in India, iGate also purchased an additional 20.6 percent stake in Patni for $301 million. The transaction was completed in May.
Meanwhile, Patni's board has granted approval for the delisting process and is to seek approval of its shareholders, and the process is also subject to regulatory approvals.
Under Indian laws, Patni can be delisted by the purchase of ordinary shares of Patni if such acquisition would result in the equity interest of iGATE in Patni being at least equal to the higher of 90 percent of the total ordinary shares, and the aggregate of pre-offer shareholding of iGATE plus 50 percent of the delisting offer size.
iGATE has the right not to purchase the offered shares if the final price discovered through the above process is not acceptable to it.
IGTE is trading at $15.61, up $0.13 or 0.84%, on the Nasdaq.
PTI is trading at $16.39, up $1.35 or 8.98%, on the NYSE.
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© 2011 AFX News
