Blackstone to buy Mphasis in deal that can top $1 bn

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SME Times News Bureau | 04 Apr, 2016
Global private equity Fund Blackstone on Monday said it has reached an accord with Mphasis to buy a majority 60.5 percent stake in the leading IT services player. The deal is valued at between Rs.5,466 crore and Rs.7,071 crore ($825 million and $1.1 billion).

"As per the Takeover Code in India, the transaction will also trigger a mandatory open offer for a purchase of additional 26 percent shares of the company, and the acquiring entity has released a public announcement to the stock exchanges," Blackstone said in a statement.

The shares are being acquired from Hewlett Packard Enterprise (HPE) that currently owns 60.5 percent in Mphasis. "Blackstone will pay a purchase price of Rs.430 per share," said the statement.

Mphasis is listed on the National Stock Exchange and the BSE, earlier the Bombay Stock Exchange.

The shares of the city-based Mpasis, however, declined by Rs.13.90 or 2.95 percent to Rs.453.60 from an opening price of Rs.472.30 and previous closing rate of Rs.467.20 on the BSE in the post-noon trading.

JM Financial Institutional Securities Ltd. is the lead manager for the deal transaction.

HPE's exit from Mphasis is in alignment reflects its capital allocation priorities and will have not any adverse impact on its commercial ties with the latter.

"While our financial relationship is changing, the business and commercial relationship with Mphasis remains an important part of our service delivery strategy," said HPE enterprise services vice-president Mike Nefkens in the statement.

HPE also plans to renew the service agreement with Mphasis for another five years post-transaction, expected to close in second half of 2016 fiscal.

"We remain committed to our strategic partnership with Mphasis and provide our customers with high level of service and support they expect from us," Nefkens said.

Mphasis' last 12 months revenue as of December 31, 2015 was Rs.59,996 million ($904 million), while net profit was Rs.6,923 million ($104 million).

It has large revenues from banking and financial services and insurance apart from new generation services, including digital solutions.

"Mphasis serves marquee customers across the globe, including six top global banks, 11 out of 15 top mortgage lenders and three top global insurance firms.

The company has about 24,000 employees across 16 countries the world over," the statement added.