iGate to delist Patni from Indian bourses by mid-2012

US-based iGate, which acquired Patni Computer Systems earlier this year, plans to delist the domestic company from Indian bourses by mid-2012.

Patni's American Depository Receipts (ADRs) would also be delisted from the New York Stock Exchange.

iGate intends to commence, through its subsidiaries Pan-Asia iGate Solutions and iGate Global Solutions Ltd, a process that could lead to the delisting of its Indian subsidiary, Patni Computer Systems, the US firm said in a statement on Wednesday.

"iGate believes that given the low liquidity of Patni's equity shares, the Delisting Offer would provide the public investors of Patni with the ability to exit fully from the shares of Patni," iGate CEO Phaneesh Murthy said.

The delisting process, if successful, is expected to be completed by mid-2012.

iGate had acquired a majority stake in Patni in January this year for USD 1.2 billion in one of the largest deals in the Indian IT sector. Post the open offer, iGate now holds about 82 per cent stake in Patni.

Following the process, equity shares of Patni would be delisted from the BSE and the NSE.

The floor price -- the minimum level at which shares have to be purchased -- for the delisting is Rs 356.74 per ordinary share, determined as per the applicable delisting regulations, the statement said.

The delisting is subject to the approval of the Patni shareholders and regulatory approvals.

The purchase of Patni's ordinary shares would be done in accordance to Securities and Exchange Board of India's (SEBI) delisting regulations at a price determined through the prescribed reverse book building process.

The floor price for the same is Rs 356.74 per ordinary share, determined as per the applicable delisting regulations.

iGate has the right of not purchasing the offered shares if the final price discovered through the above process is not acceptable to it.

While the price payable for the Patni shares will be determined through the reverse book binding process, iGate's ability to afford the price will be determined by a number of factors including the limitations on debt incurrence under its existing financing agreements.

Based on such restrictions and other factors, iGate has proposed to arrange a debt facility of about $215 million, which is expected to serve as the source of funds to pay for the acquisition.

"If, however after the reverse book building process, we conclude that the ultimate discovered price to purchase the Patni shares outweighs the benefits, we will examine our alternatives," Murthy said.