Mphasis rallies 6% as Blackstone, others set to acquire majority stake

Mphasis rallies 6% as Blackstone, others set to acquire a majority stake

Mphasis Limited is an IT services company based in Bangalore, India. The company provides infrastructure technology. While shares of Mphasis climbed 6 percent in Monday’s trade after private equity funds managed by Blackstone entered into definitive agreements to acquire a majority stake in the IT firm.

Moreover, a fully-owned subsidiary of the Abu Dhabi Investment Authority (ADIA), UC Investments, and other long-term investors will co-invest along with Blackstone, a press release suggesting. While the transaction triggered an open offer for the acquisition of up to 26 percent stake at a price of Rs. 1,677.16 per share, aggregating Rs. 8,262 crore, payable in cash.

On the other side, based on the open offer subscription, the blended purchase price is expecting to be Rs. 1,452-Rs. 1,497 per share. This would be a 12-16 percent premium to Mphasis 12-month average price and a 3-6 percent discount to the 6-month average price. Overall, the purchase consideration will vary between Rs. 15,200 and Rs. 21,000 crore.

While ensuing, the development, the stock rose 6.32 percent to hit a high of Rs. 1,805 on BSE. Amit Dixit, Co-Head of Asia Acquisitions and Head of India for Blackstone private Equity, said. Information technology and software services have been strong sectors for value creation for the last two decades.

Mphasis is backed by strong secular tailwinds as global enterprises increasingly migrate to the cloud. Moreover, the company is exceptionally well-positioned given a terrific management team, the strong order backlog. Long-term strategic customer base, deep domain expertise in financial services, and a world-class suite of Cloud and digital offerings.

While a different fund managed by Blackstone had acquired a controlling stake in Mphasis from Hewlett Packard Enterprise in September 2016. The sale is expecting to complete in the coming months, subject to customary closing conditions and regulatory approvals.

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