The iGate-Apax Partners combine has emerged the highest bidder for India's seventh-largest software services firm, Patni Computer Systems.
However, the Carlyle-Advent consortium could revise its bid upwards, said two independent sources tracking the deal.
"The bids finally came in last night and deal closure is expected over the weekend. As of now, iGate's bid is more aggressive, but it is difficult to commit whether it is a closed chapter," said one source.
Nasdaq-listed iGate, headed by Phaneesh Murthy, and private equity firm Apax have bid in the range of Rs 525-530 a share.
Patni brothers Narendra, Ashok and Gajendra together hold 46 per cent stake in the company.
Private equity major General Atlantic owns 17 per cent through American depository receipts.
iGate's offer values the company at a premium of 10 per cent on its current market price. Patni shares on Thursday closed at Rs 480.5, marginally up from the previous close.
|Financials for Q3 2010 in $mn, except EPS in $|
Meanwhile, the PE consortium of Carlyle and Advent has bid Rs 490
This values the company at par with the current market price. But two independent sources said Carlyle might still revise its bid to at least match that of iGate.
"So far, iGate has emerged the highest bidder. Patni will make an announcement soon. Unlike the PE consortium, iGate does not have demands like a no-compete clause," said a source close to the development.
If the deal goes through, it will bring to an end a four-year on-again-off-again debate on who will acquire the promoters' stake.
Patni is likely to be a leverage buyout, which is why potential suitors have secured financing from banks to fund an acquisition that is likely to cross $1 billion.
iGate and Apax have raised a credit line of over $600 million from Standard Chartered Bank, Deutsche Bank and Barclays. iGate has also initiated a process to raise up to $392 million by selling 16 million shares.
From iGate's point of view, a Patni buy fits perfectly into its plan to become a $1-billion company. But analysts are concerned about how integration will take place.
"iGate is less than half Patni's size. Other than integration challenges, there will be employee attrition issue as well," said an analyst on condition of anonymity.
As of 2009, Patni had an employee base of 13,995, compare with iGate's 6,910. As of September 30, Patni had 282 active clients, against iGate's 80.
"If iGate bags the company it will be a huge asset. Patni has an application, development and maintenance business of at least $450 million (around Rs 2,025 crore).
Its insurance business is around $240 million (around Rs 1,080 crore). Compare this with iGate's overall revenue of $230 million (around Rs 1,035 crore)," said another analyst.
According to Offshore Insight report, whatever the outcome, Patni will lose revenues upwards of 15 per cent.
"Nearly 60 per cent of clients we surveyed said that they have seen a noticeable positive change in Patni's strategy, solutions and delivery in the past 18 months and they intend to continue working with Patni. . . . But with this news, they are now concerned," said Sudin Apte, Principal Analyst & CEO at Offshore Insights.