Karan Razdan (10FN-052)

Srikanth Konduri (10FN-109)

Nikhil Gupta (10FN-121)
MACR Project
Vaibhav Chaudhary (10FN-11
Swastik Dash (10FN-144)
Vivek Sharma (10FN-146)
Deal Analysis

iGate-Patni

Introduction

Background
iGate entered into purchase agreement with Patni (2.5 times

the size of iGate) on January 2011 and announced completion

of acquisition in May for $1.22 billion (5465.46 crores then)
Acquisition the biggest involving an Indian company beating

the previous record of Oracle acquiring i-flex for 4090 crores

iGate chief executive Phaneesh Murty designated as CEO and

MD of combined entity
Combined entity referred to as iGate Patni with adequate

representation from both sides, but both continue to be listed

separately

Combined Entity

Diversified Revenue

Financial Highlights

Acquisition Details
Price paid by iGate was Rs 503.5 amounting to $921 million to

acquire 63% stake

Open offer to buy additional 20% stake for $301 million also
got fully subscribed at the same price

Companies are willing to give you deals worth about 7.5-10% of

your revenue, Murthy said. That means they can now go for
deals in the $75-100 million range (on an annual basis).

Key Assumptions
Parameter
(as on Dec.
2010)

iGate

Patni

Sales growth %

15%

10%

EBIT margin %

30%

32%

4%

9%

15%

19%

3%

5%

1.19

1.7 (0f ADR listed in

NYSE)

10.5%

15.7%

Depreciation as % of
Sales
Tax rate on EBIT
Terminal growth rate
Unlevered Beta
D/E ratio standalone
WACC
Exchange Rate

1$ = Rs. 46

Financing the deal

Valuation Figures
iGate

Patni

Patni (APV)

Firm Value
= Rs.
5372.92 Cr.
Value per
share = $
20.5

Firm Value
= Rs.
6795.55 Cr.
Value per
share = Rs.
507
Premium to
CMP =
10.2%

Firm Value
= Rs.
6922.63 Cr.
Cash Flow
from Tax
Shield =
Rs. 172.46
Cr.
EV/EBITDA
= 9.0x

Previous Transactions
Deal

Year

Valuation

EV/EBITDA

Tech Mahindra Ltd.

Purchased 31%
stake in Satyam
Computer Services
Ltd.

2009

$1.13 billion

EDS Corp. acquired

Mphasis BFL

2006

Rs. 1748 Cr.

16.1

Oracle Corp
acquired i-flex
Solutions Ltd.

2005

Rs. 4090 Cr.

19.6

Multiple Synergies
Opportunities

to play in larger deals,

more verticals
Cross-sell key solutions to a broader
client base
Efficiencies in operations and
delivery services
Economies of scale from
consolidation of shared services

Creating a Tier-I
Provider

Consolidated Financial
Overview

Executive Summary

Employee Base of 26,000 and a client base of 360

Two $100 million dollar clients, two $50 million-dollar clients and Thirtysix $5 million-dollar clients
Top 5 accounts contributing to 38% and top ten accounts contributing to
49% of revenues
10 Delivery centers across India, Mexico and Australia, and over 50

Thank You