iGATE to become 100 % pati to Patni: SMC Global
SMC Global has come out with its report on iGATE majority stake in Patni computers.
November 17, 2011 / 15:01 IST
SMC Global has come out with its report on iGATE majority stake in Patni computers.
1. iGate has acquired majority stake in Patni computers in May 2011 for US$1.2 Bn at Rs 503.50 per share.2. If one observes the previous track record of the iGate acquisitions, they had the habit of delisting the companies after the acquisition.3. In the similar lines, today iGate has announced the delisting plans of Patni computers.4. Like in the case of any delisting, the key two factors to consider are: the shareholding pattern and the delisting price.5. The shareholdern pattern of Patni Computers suggests that the chances of successful completion of delisting as per the Reverse Book Building guidelines is very high.6. For instance, the iGate already holds 84.19%. The remaining 15.81% is with outside shareholders. Hence, as per the delisting norms, they have to acquire atleast 50% of the remaining outside shareholding. Hence, they shall be able to attract atleast 50% of the 15.81% (that is, 7.91%) response in the reverse book building, for the delisting to be successful. Considering the fact that 11.67% is with institutional investors, there is a very high chance that iGate will be able to successfully complete the delisting.7. As far as the delisting price is concerned, the company has fixed the floor price of Rs 356.74 per share in the delisting. Even though the company has fixed this price, it will be highly surprising if the final delisting price as per reverse book building comes less than Rs 503.50 per share, (as given in the original acquisition price).8. So, the delisting price can be expected to be atleast Rs 503.50 per share.9. Hence, considering today's closing price of Rs 388.65 per share, there is a healthy upside for the investors to make in the context of this delisting.10. However, as company has indicated, the delisting process of Patni may extend upto mid-2012.11. In summary, post this delisting, iGate will emerge as "100% pati to Patni".Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.To read the full report click on the attachment 
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