The Hindu Business Line : EDS makes open offer for MphasiS

In a smart move aimed at acquiring controlling stake in the Bangalore-based IT services and BPO firm MphasiS BFL Ltd, the Plano, Texas-based EDS has announced a conditional open offer on Monday.

As part of this offer, EDS proposes to acquire approximately 52 per cent stake in MphasiS at an offer price of Rs 204.5 per share in cash.

EDS expects to make a formal announcement in this regard to the Indian stock exchanges on Tuesday. The price of Rs 204.5 ($4.58) represents an approximate 30 per cent premium to the 26-week average price of MphasiS. However, it was lower than the current market price of Rs 215.80. MphasiS shares closed higher by 3.6 per cent on the BSE on Monday at Rs 215.80.

The offer will be contingent upon EDS acquiring 83 million shares, representing approximately 52 per cent of the current shares outstanding.

If at least 83 million shares are not tendered in the offer, EDS will not accept any shares tendered, the release said.

Completion of deal

At current exchange rates, the total purchase price for the 83 million shares is approximately $380 million. EDS expects this transaction to be completed by early third quarter i.e., July-September quarter.

"This offer is complementary to our overall strategy to enhance EDS' presence and capabilities in India," said Mr Mike Jordan, EDS Chairman and Chief Executive Officer, in the release

Among the private corporate bodies, Barings India Investments Ltd owns 34.9 per cent in MphasiS BFL, while MphasiS Holdings owns 4.62 per cent as of December 31, 2005. MphasiS Chairman Mr Jaithirth Rao owns 3.9 per cent stake in personal capacity.

Some of the key FIIs which own stake in MphasiS include HSBC Global, Merrill Lynch Capital, Morgan Stanley, CLSA, FID Funds, Aberdeen Asset Management, among others. Among mutual funds, Fidelity and Templeton have holding in the company as of December 31, 2005.

MphasiS currently has more than 12,000 employees, including about 11,000 in India.

It serves clients in multiple industries, including financial services, transportation, technology and healthcare.

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