 "Blackstone to acquire Mphasis; deal size $825 million to $1.1 billion")
Private equity player Blackstone on Monday announced that it has entered into a definitive agreement with Hewlett Packard Enterprise (NYSE: HPE) to buy a majority stake in Mphasis. This deal represents the largest acquisition by Blackstone in India. 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 also signed a master services agreement (MSA) with Mphasis, committing business of $990 million over a period of five years The duration of the MSA is five years with three automatic renewals of two years each.
Also, Mphasis will be included in HPE’s Preferred Provider Program, opening up significant additional revenue opportunities.
HPE currently owns 60.5% of Mphasis. Blackstone will pay a purchase price of Rs 430 per share to HPE.
According to the Takeover Code in India, this transaction will trigger a mandatory open offer for a purchase of additional 26% shares of the company and the acquiring entity has released a public announcement to the stock exchanges.
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 (BFSI) 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 road-map for company’s growth. With a long-term commitment of company’s largest customer, HPE, we are confident that Mphasis will scale new heights.”
Mphasis’ last twelve months revenue as of December 31, 2015, was Rs 59,996 million ($904 million) and profit after tax was Rs 6,923 million ($104 million). It has deep vertical expertise in the BFSI sector and strong portfolio focus on new generation services, including digital solutions. Mphasis serves customers across the globe, including 6 top global banks, 11 out of 15 top mortgage lenders, and 3 top global insurance companies. The company has roughly 24,000 employees across 16 countries.