Blackstone to buy 60.5% in Mphasis; open offer at Rs 457/sh

Blackstone India has entered into a definitive agreement with Hewlett Packard to buy a majority stake in Mphasis Limited, the private-equity firm announced this morning.This deal represents the largest acquisition by Blackstone in India and is the largest private equity transaction in India. HP currently owns 60.5 percent of Mphasis. Blackstone will pay a purchase price of Rs 430 per share to HP. As per the takeover code, this transaction will trigger a mandatory open offer for a purchase of additional 26 percent shares of the company.Marble II Pte Ltd, Marble I Pte Ltd and Blackstone Capital Partners have "made an open offer to the public equity shareholders of Mphasis Ltd to acquire up to 54,928,161 fully paid-up equity shares of face value of Rs 10 each, representing 26 percent of the total voting equity share capital... at a price of Rs. 457.54 per share," for a total price of about Rs 2,513 crore, Mphasis informed exchanges today.Based on the open offer subscription, the purchase price consideration will vary between Rs 5,466 crore and Rs 7,071 crore (USD 825 million-USD 1.1 billion).HP and Blackstone have agreed on the terms of a master services agreement (MSA) for a duration five years with three automatic renewals of two years each."Under the MSA, HP has proposed to commit a minimum revenue amount escalating year over year and totalling USD 990 million over the next five years. Also, Mphasis will be included in HP's Preferred Provider Program opening upsignificant additional revenue opportunities," it said.Mphasis' revenue dependence on HP was the major risk that was coming in the way of a stake sale, analyst Rahul Jain of Systematix Shares told CNBC-TV18. "The agreement must have led Blackstone to sign the deal," he said.Mphasis was acquired by EDS in 2006, which in turn was bought over by HP in 2008. Mphasis' revenues from HP, however, have steadily come down over the years.With inputs from PTI