iGate to delist Patni @ Rs.520

iGate to delist Patni @ Rs.520

iGate Corp will pay minority shareholders of Patni Computer Systems Rs.520 per share to be able to delist the company from stock exchanges and merge it with itself, the company announced on Monday. US-based iGate, which holds 81% stake in Patni, will have to shell out close to Rs.1,394.82 crore to complete the delisting offer. This is much higher than what iGate had budgeted for initially, when it made an offer for 26,823,624 shares in March. The company had set a floor price of Rs.356.74 in its reverse book building process, and indicated that it was comfortable paying a maximum price of Rs.430-450 per share. But minority shareholders were holding out, demanding a higher price in the reverse book building, as the market price of the stock had shot up to Rs.500-520 since March 14, 2012. The company finally relented, agreeing to pay Rs.520 apiece. Analysts, however, said the price is only slightly higher than the Rs.503 per share at which iGate had acquired the controlling stake in Patni in May last year. “Considering relief from hassles of domestic listing and integration benefits post delisting, it’s a slight premium. The investors as such also try to benefit from delisting if they know company is determined to get itself delisted,” said an IT analyst at domestic brokerage house, unwilling to be quoted. iGate, which had initially raised debt of $215 million, is likely to fund the differential amount with further debt of $50 million. iGate CEO Phaneesh Murthy pointed out a few factors which helped the company secure the debt. “Our December quarter was quite good, looking at which banks were ready to extend the credit to $265 million. Also, the interest rate on the loan was a little lower than what we had expected.” Murthy said the delisting process was a big step towards the goal of working as a single entity. “This will now avoid dual compliance. Things work out better when you function as one company.”