Python-swallows-an-elephant: iGate and Patni Deal

iGate with Apax Partners, will acquire 63% of the company for the final price of Rs. 503.50 effectively valuing Patni, the company at $1.5 Billion. By Indian law, iGate will have to make an open offer to acquire an additional 21% of the company.

With that, a company with revenues of about $200 million in 2009 acquires control of a company with revenues of about $650 million. Even by market cap, iGate is a third smaller than Patni

This really shows the risk taking ability of a company and it’s management. Phaneesh Murthy is known for his risk taking ability and he has been a go getter. He has built Infosys from a mere $2 million to over $700 million when he was head of sales and marketing at Infosys.

Acquiring Patni was Murthy’s biggest challenge so far, but it is in line with his commitment to make iGate a $ 1 Billion firm by 2012, a tough job for a $200 million company. Never the less, this deal gives Murthy the size he was looking for.

But, he is still a long way from playing with big league players like TCS, Infosys and Wipro. As Murthy himself admitted, “The Challenge is to take a company, which is moving like a auto rickshaw and convert it’s pace to that of a speeding car” He already said, building the combined go-together market strategy, building strong account management principles so that top accounts grow at much stronger pace and creating integrated leadership team would be the priority.

I have seen an acquisition of around $20 mil, which was miserably failed, though there was lot of synergy. Currently I am experiencing a bigger merger, which is being done in much more systematic way. But one thing I am sure about, if there is one person who can make this deal or integration work is Phaneesh Murthy and given the way in which he transformed iGate; he will pull this quite successfully.

Its all about leadership.