The board of directors of Mphasis, an applications and BPO services company, has supported global IT services giant Electronic Data Systems Corp's offer to acquire 52 per cent stake in the company for $380 million.
"We are supportive of this transaction and look forward to its successful closure," Jerry Rao, chairman and CEO of Mphasis said in a media release in New Delhi on Tuesday.
EDS plans to acquire 83 million shares totalling 52 per cent stake in Bangalore-based Mphasis for $380 million.
If at least 83 million shares are not tendered in the offer, EDS would not accept any shares, the US-based company said.
Refuting reports that he plans to join EDS at a senior management position, he said: "I intend to live in India and look forward to continuing to run Mphasis."
A large part of the Mphasis shares are held by foreign institutional investors, mutual funds and banks.
When asked whether promoters would also offload their stake during the offer, a senior company official said nothing could be said at present.
Recently, Baring India Investments Ltd was looking at a buyer for its 34.90 stake in the company but did not go ahead with the deal as it found the offers unattractive.
On Monday, EDS had said it would make an offer to acquire 52 percent in Indian software services provider MphasiS BFL Ltd, months after its negotiations to acquire Barings India Investments' 32 percent stake in the company fell through.
The Texas-based company said it will make a conditional open offer to acquire 83 million MphasiS shares at Rs 204.50 (approximately $4.58) apiece amounting to a total purchase price of Rs 1,672 crore ($380 million), pursuant to Indian securities regulations.
The price represents a premium of approximately 30 percent to the 26-week average price of the MphasiS scrip on the stock market.
An MphasiS spokesperson had confirmed that the company was scheduling a board meeting on Tuesday to discuss the offer to be made by EDS. "The management's response to the offer is positive," the spokesperson confirmed.
According to a statement from EDS, the offer will be contingent upon the company acquiring 83 million shares. If these shares are not offered, EDS will not accept any share tendered.
"This offer is complementary to our overall strategy to enhance EDS' presence and capabilities in India," said Mike Jordan, EDS chairman and chief executive officer, in the statement.
MphasiS had reported a top line of around Rs 1,554 crore on a net of Rs 113 crore for the nine-month period ended December 31, 2005. It has more than 12,000 employees on its rolls, including about 11,000 in India.
MphasiS serves clients in multiple industries, including financial services, transportation, technology and health care. EDS currently has 3,000 people in India (Chennai and Pune) and is expected to scale staff strength up to 5,500-6,000 in the near future.
The company recently announced that it was lining up $35 million for its expansion in India.
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