Blackstone on Monday announced that private equity funds managed by Blackstone have entered into a definitive agreement with Hewlett Packard Enterprise (HPE) to buy 60.5 per cent stake in Mphasis Limited. This deal represents the largest acquisition by Blackstone in India.
Blackstone will pay a purchase price of Rs 430 per share to HPE. As per the Takeover Code in India, this transaction will trigger a mandatory open offer for a purchase of additional 26 per cent shares of the company and the acquiring entity has released a public announcement to the stock exchanges. Based on the open offer subscription, the purchase price consideration will vary between Rs 5,466 crore and Rs 7,071 crore (or, approximately $825 million – $1.1 billion).
HPE and Blackstone have agreed on the terms of a Master Services Agreement (MSA) which HPE proposes to sign with Mphasis, post approval by Mphasis’ Board of Directors and shareholders. The duration of the MSA is five years with three automatic renewals of two years each. Under this MSA, HPE has proposed to commit a minimum revenue amount escalating year over year and totaling $990 million over the next five years. Also, Mphasis will be included in HPE’s Preferred Provider Program opening up significant additional revenue opportunities.
The sale is expected to complete in the coming months, subject to customary closing conditions and approvals.
Amit Dixit, senior managing director and co-head of private equity in India at Blackstone, said: “We are impressed by Mphasis’ strong domain expertise in Banking, Financial Services and Insurance vertical. Its deep relationship with marquee global customers has enabled it to deliver growth above the industry average in its Direct International segment. We see large potential going forward driven by Mphasis’ world-class delivery capabilities and its access to Blackstone’s portfolio of companies across the globe. The company has an experienced management team who has a clear roadmap for company’s growth. With a long-term commitment of company’s largest customer, HPE, we are confident that Mphasis will scale new heights.”
For the quarter ended ended December 2015, Mphasis reported a consolidated net profit of Rs 173.64 crore, down 6 per cent against Rs 184.72 crore in the sequential quarter ended September 2015. The company registered net profit of Rs 161.96 crore in the corresponding quarter ended December 2014.
In the past one year, share price of Mphasis ralled 19.14 per cent to Rs 467.40 till April 1, whereas the BSE Sensex dipped 10.58 per cent to 25269.64 during the same period.
Reacting to the news, the stock of Mphasis opened higher by 2.03 per cent on BSE at Rs 475.90.