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May 09, 2012, 08.49 AM IST
The Patni name will cease to exist in the Indian markets. Over a year after i-Gate wooed and won over Patni Computers, it has received the go-ahead to delist Patni from the bourses, reports Sunanda Jayaseelan of CNBC-TV18.
For the Patni brothers, it's time to say good-bye to their brand. iGate's Phaneesh Murthy, who bought Patni Computers a year ago, is ready to fulfill his dream of making it "one company".
And it starts with a new look and having faced some trouble protecting itself in a few markets because of the Patni family name, iGate has decided to drop the Patni name. While iGate and Patni will continue to function independently, they will go to market under a single "iGate" brand. And this new look comes even as iGate gets permission to delist Patni from the Indian bourses; a move Murthy insists is not a cost-cutting exercise.
Phaneesh Murthy, chief executive officer, iGate, says that this delisting was not done from an operational cost synergy perspective. It was done more for strategic reasons about not wanting to have two public companies so on and so forth. It was done for those kinds of reasons.
We understand that iGate received approval to delist Patni on 4th May but the stock will stop trading only by the third week of May. For iGate, the process itself has not been smooth.
Its plans to raise UDS 215 million dollars in debt to buy out Patni's minority shareholders flopped. Against its floor price of Rs 356 per share, its open offer for Patni drew offers at Rs 520 per share. This meant iGate had to raise UDS 265 million in debt to make the open offer successful. iGate admits this higher price was fair to Patni shareholders. And of course, operational synergies have already worked in iGate's interests.
“The operational synergies have already helped us to get up to about USD 32 million run rate in annual savings. So that has already been achieved thanks to the operation integration, ” added Murthy. Murthy is betting on these savings to meet the USD 75-80 million interest payout on debt due this year. He also feels that with projected growth of 35-40%, iGate will be able to rapidly reduce its debt burden.
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