India’s Patni in Sale Talks

MUMBAI (Reuters) – India’s Patni Computer Systems (PTNI.BO) is in talks to sell a majority stake for about $1 billion and the suitors include Japan’s NTT Data Corp (9613.T) and Fujitsu (6702.T), three sources with direct knowledge of the development said.

The Japanese firms and the IT arm of India’s Larsen and Toubro (LART.BO), which is also in the running, are negotiating for 625 to 675 rupees a share, while the Patni brothers who control the software services firm are asking for 700-750 rupees, the sources said.

A 51 percent stake at 675 rupees a share would cost about $981 million, while a price tag of 700 rupees would take the deal value to about $1 billion.

At 0650 GMT, shares of Patni, which has a market value of $1.8 billion, were trading down 2.6 percent at 592.90 rupees, while the main index .BSESN was down 1.2 percent.

Patni’s shares have risen about a fourth so far in 2010 and currently trade at about 14.6 times forward earnings, costlier than rivals such as MphasiS (MBFL.BO) and Tech Mahindra (TEML.BO) that trade at a multiple of 13.9 and 12, respectively.

“The talks are on. But there are no exclusive talks to any of them at this point in time,” one source said.

“Patni is still talking to various suitors and a deal is still sometime away,” he said.

The founding Patni brothers aim to sell a large part of their 46.5 percent holding, while private equity firm General Atlantic, will offer its 17.7 percent stake, the sources said.

The three Patni brothers — Narendra, Gajendra and Ashok — would retain a small stake in the firm, they said.

Narendra Patni is widely credited with being instrumental in developing the Indian IT industry and is a poineer in the offshore outsourcing model after he founded the company more than three decades ago.

Patni’s former employees include Narayana Murthy and Nandan Nilekani, who later went on to start India’s No. 2 software-services firm Infosys Technologies (INFY.BO).

Ambit Corporate Finance is advising Patni on the sale, the sources said.

All sources declined to be named as they were not authorised to speak with the media.

Patni, Fujitsu, NTT and L&T could not be immediately reached for comment.

By Pratish Narayanan and Indulal P.M.(Additional reporting by Janaki Krishnan; Editing by Ranjit Gangadharan)