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Parteek&Varun@ARC School Of Finance
PATNI &iGATE ACQUISITION
Parteek&Varun@ARC School Of Finance
Parteek&Varun@ARC School Of Finance
DEAL OVERVIEW
Acquirers Pan-Asia iGATE Solutions, Mauritius and iGATE Global Solutions Limited, India.
Seller Promoter Group of Patni& GA
Acquisition From the Promoter Group: 60,091,202 representing 44.37% of the total issued shares.
From GA: 2,01,61,867 ADS, representing 14.89% of the total issued shares&27,52,081 representing 2.03% share capital of Patni (“GA Shares”).
From the public shareholders of Patni 2,70,85,565 representing 20% of the share capital of Patni.
Acquisition Price INR 503.50 per share / ADS
Parteek&Varun@ARC School Of Finance
Mode of acquisition i.Share Purchase Agreement dated January 10, 2011, between the Promoter Group, iGate and Pan-Asia to acquire the Sale Shares at a price of INR 503.50 per Sale Share
ii. Securities Purchase Agreement dated January 10, 2011, between Pan-Asia, iGate and GA to acquire the GA ADS at a price of the dollar-equivalent of INR 503.50 per equity share underlying the ADS
iii. Share Purchase Agreement dated January 10, 2011, between Pan-Asia, iGate and GA to acquire the GA Shares at a price of INR 503.50 per equity share .
iv. Mandatory open offer made to the public shareholders of Patni under the Takeover Code 1997.
Total Consideration USD 1.22 billion
Mode of Funding Combination of balance sheet cash, debt and fresh equity issuance
DEAL OVERVIEW
Parteek&Varun@ARC School Of Finance
PARTIES INVOLVED
iGate Corp is the ultimate parent company of all iGate group companies.
It was incorporated on November 12, 1996 under the laws of the Commonwealth of Pennsylvania. Mr. Sunil Wadhwani and Mr. Ashok Trivedi are the founder shareholders of iGate Corp.
iGate Corp is an outsourcing provider of information technology (“IT”) and IT-enabled operations solutions & services and caters to different geographies through its subsidiaries.
iGate group has over 8,200 employees and 7 global delivery centers in Australia, India, Japan, and Mexico with offices in 16 countries and 4 continents.
The shares of iGate Corp are listed on Nasdaq stock exchange.
Parteek&Varun@ARC School Of Finance
PARTIES INVOLVED
Patni was incorporated on February 10, 1978 under the Companies Act.
The shares of Patni got listed on BSE and NSE on February 25, 2004. As of January 7, 2011, the total paid-up equity share capital of Patni was INR 26,33,02,660 consisting of 13,16,51,330 equity shares of face value of INR 2 each.
There are no partly paid-up shares issued by Patni. Patni and its subsidiaries are engaged in IT consulting, software
development and Business Process Outsourcing ("BPO").
Patni has over 16,000 employees and 30 international offices across the Americas, Europe and Asia-Pacific and 22 global delivery centers across the world.
The equity shares of the company are listed on the BSE and the NSE.
The ADS of Patni are listed on the New York Stock Exchange ("NYSE")
Parteek&Varun@ARC School Of Finance
COMPANY STRUCTURE
Parteek&Varun@ARC School Of Finance
FUND RAISING BY iGATE
a. USD 50 million revolving credit facility (the “Revolving Credit Facility”); and b. either (a) up to USD 770 million in aggregate principal amount of senior notes or (b) if the Notes are not issued on or prior to the consummation of the transaction, up to USD 770 million of senior unsecured loans under a credit facility (the “Bridge Facility”).
c.Loan is financed by the Jefferies Finance LLC and Royal Bank of Canada
DEBT RAISED
EQUITY RAISED
330 Million dollar equity raised from PE firm APAX Partners
FROM BALANCESHEET
They have150 million cash in their Balance sheet.
Parteek&Varun@ARC School Of Finance
COMERCIAL CONSIDERATION
What are the Reasons Behind iGATE Acquisition of Patni?
Patni had god customers & lot of cash in balance sheet
Patni had depth in verticals like healthcare,manufacturing,retail&product enginering services
No clash of business space
Patni had lot of real estate assets
Large workforce of 28000
Parteek&Varun@ARC School Of Finance
Scaling up its geographic capabilities, particularly in EMEA and emerging markets
Concentrating the sales effort on three core verticals: financial services, insurance, health care which together contribute >50% of total revenue
Expanding the portfolio with higher value offerings in targeted micro-verticals: investing in building or acquiring software IP within each of these core verticals, also in increasing the number of personnel such as solution architects with industry domain expertise
Leveraging the iTOPS model / increasing outcome based pricing Winning larger deals.
STRATEGY AFTER ACQUISITION
iGate Patni is pursuing the following strategic initiatives
Parteek&Varun@ARC School Of Finance
KEY FINANCIALS- IGATE
2008 2009 2010 2011
219 193 281
780
2008 2009 2010 2011
30 29
58
106
2008 2009 2010 2011
40 3661
143.8
2008 2009 2010 2011
29 29
5260Net Income
(In Million dol-lars)
Revenue(In Million Dollars)
EBIT(In Million Dollars)
EBITDA(In Million Dollars)
Parteek&Varun@ARC School Of Finance
2008 2009 2010 2011
3117 3146 3188
3568
2008 2009 2010 2011
485605
694581
2008 2009 2010 2011
600748 812
717
2008 2009 2010 2011
438
586 623
418
Key Financials:PATNI
Revenue(In Crore)
EBIT(In Crore)
EBITDA(In Crore) Net Income(In Crore)
Parteek&Varun@ARC School Of Finance
SHAREHOLDER PATTERN OF PATNI
45.72
2.451.270.74
13.38
2.1
3.360.18
2.090.04
0.12
28.46
0.0900000000000001
Promoters and Relatives of PromotersMutual Funds/UTIFinancial Institutions/BanksInsurance CompaniesForeign Institutional InvestorsBodies CorporateIndividualsNRIsForeign Corporate BodiesDirectorsTrusts and Clearing MembersShares underlying ADRs*Others
Parteek&Varun@ARC School Of Finance
Multiples
%of ENTERPRISE VELUE
52w Diluted Revenues EBITDA EBIT
Company CMP High M.Cap EV LTM LTM LTM
patni 460.40 74% 6,240.75 4,687.00 1.47x 5.77x 6.75x
tech mahindra 731.00 63% 9,007.12 7,933.82 1.60x 7.41x 8.51x
ORACLE 2178 0.726 18274.885 18259.966 6.09x 13.79x 14.63x
High 6.09x 13.79x 14.63x
Mean 3.05x 8.99x 9.96x
Median 1.60x 7.41x 8.51x
low 1.47x 5.77x 6.75x
Parteek&Varun@ARC School Of Finance
STOCK CHART
iGATEPATNI
Parteek&Varun@ARC School Of Finance
PREVIOUS ACQUISITIONS BY PATNI & iGATE
Parteek&Varun@ARC School Of Finance
HIGHLIGHTS OF PATNI & iGATE TOGETHER
Employee Base of 26,000 and a client base of 360. Two $100 million dollar clients, two $50 million dollar clients and 36 $5 million dollar clients.
Top five accounts contributing to 38% and top ten accounts contributing to 49% of revenues.
10 Delivery centers across India, Mexico and Australia, and over 50 offices in 20 countries.
Parteek&Varun@ARC School Of Finance
Company Revenue for the year ended March 31, 20103
Tata Consultancy Services USD 7.11billion
Infosys USD 5.3 billion
Wipro USD 4.7 billion
HCL Technologies USD 2.8 billion
iGate – Patni Computers USD 0.941 billion
DREAM OF BILLION DOLLAR
Parteek&Varun@ARC School Of Finance
THANKS