Blackstone plans to buy HP's stake at staggering price
World’s largest private equity firm Blackstone Group on Monday announced it is buying global tech giant Hewlett Packard Enterprise’s (HPE) majority stake in the Indian outsourcing firm Mphasis Ltd. for up to $1.1 billion.
In what the company claims its biggest acquisition in the Indian market, Blackstone will buy a 60.5% stake from HPE for $6.49 (Rs.430) a share.
The company said the transaction will be followed with a mandatory open offer to acquire additional 26% stake in Mphasis for Rs.457.54 a share, in line with the Indian acquisition rules.
According to Blackstone, the purchase price, in lieu with a counter to the offer, is likely to vary between Rs.54.66 billion and Rs.70.71 billion ($825 million and $1.1 billion).
Other companies including private equity firms such as Apollo, the Indian IT major Tech Mahindra and Blackstone had been bidding for the deal for several months.
HP Enterprises (HPE) has also agreed to sign a master-services agreement with Mphasis. The five-year agreement with three automatic renewables of two years each, has allowed HPE to propose a minimum revenue amount totalling $900 million over the five-year period.
The announced transaction is a part of Blackstone’s business strategy to expand its operations across the globe. Many global companies have been outsourcing their businesses in the global low-cost markets including India to cut their operational costs.
In December last year, the New York-based company had acquired a majority stake in the Kerala-based IBS software services for $170 million.
With the latest acquisition, Blackstone’s total investment in India goes up to $6 billion.
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