US IT services provider iGate has agreed to acquire a majority stake in Indian outsourcer Patni in a deal worth up to $1.22 billion.
California-headquartered iGate will initially pay $921 million for a 63% stake in Patni, with an open offer to buy a further 20.6% share of the business for an additional $301 million.
The purchase of Mumbai-based Patni will allow iGate to further expand into India, deliver larger customer contracts, and sell in to more industry verticals, iGate says. Patni specialises in providing outsourced IT services including application development and maintenance, technology consulting, and systems integration.
"The objective is to synergise the leadership team of both iGate and Patni to create, over time, a world-class integrated leadership team which will drive the combined company to newer horizons," said iGate CEO Phaneesh Murthy, in a statement. The combined headcount of the two companies will be approximately 25,000, according to iGate.
Patni competes with Indian outsourcing rivals such as Tata Consultancy Services, Infosys and Wipro, although its customer base and revenues are much smaller. Its future has been the subject of speculation for some time: in May 2010, reports suggested Patni could be acquired by Japanese telco NTT.
In November 2010, UK IT services provider 2e2, one of the government’s approved IT suppliers, outsourced 100 jobs to Patni.