After more than a year of “will it happen, and who will it be?” speculation, Patni Computers is finally being scooped up…by iGATE Corporation. On January 10, 2011, iGATE announced the signing of a definitive agreement to acquire up to an 83 percent stake in Patni. At a transaction value of US$1.22 billion, it is the largest acquisition in the Indian IT services market.
This acquisition bodes well for iGATE, Patni (which will continue to operate as an independently listed company) and the buyer market, which is increasingly questing for service provider portfolio rationalization, enhanced quality, risk mitigation (post the Satyam crisis) and larger service providers. But one of the biggest hurdles the new company must surmount from the starting line and consistently jump is presentation of competitive differentiation against global majors, Tier-1 and Tier-2 Indian service providers. For insights, please see our complimentary November 2010 report, “Survival of the Differentiated: The New Mantra of Success for Tier-2 Service Providers.”
While we’ll scrutinize this deal in detail in the next several days, its shape, flavor and underlying market and buyer drivers are largely in line with our Patni acquisition analysis, available in our free and downloadable report, “Patni: What if Ownership Changes are Afoot?”, published in December 2009.