Patni, the larger, acquired part of recently enhanced offshore IT/BP player iGate Patni, is to finally delist from the Indian stock exchanges, after minority shareholders accepted an increased offer of Rs.520 per share for the remaining 19% of Patni shares not currently owned by iGate.
This is a good win for the minority shareholders since it is a 16% increase on the previous reported offer by iGate. And significantly, it is a 3% premium on the per share price iGate paid for a majority stake in Patni last January (see iGate seals Patni deal (update)). As a further sweetener iGate is adding $7m in cash to the deal.
CEO Phaneesh Murthy said recent improvements in iGate Patni’s performance (see iGate Patni margins on the move) had helped it raise its debt funding to $265m to cover this higher offer. Certainly margins have been on the rise thanks in part to the weak rupee, but also we suspect to cost cutting associated with back office integration - as iGate puts it the ‘front-end and shared services [are now] successfully integrated’.
It said the delisting should further drive out costs in areas like compliance and governance, which will further benefit the bottom line. But of course it’s not all about cost cutting. iGate Patni will need to have a clear vision about how to drive top line growth from the enhanced business, particularly as it gears up for its ‘possible downstream merger’.