Blackstone snaps up HP's MphasiS in $1.1 billion deal

Purchasing the Indian IT outsourcer from Hewlett-Packard could cost up to $1.1 billion.

Written by Charlie Osborne, Contributing Writer on April 4, 2016

Blackstone Group has agreed to purchase Indian IT outsourcing services firm MphasiS from Hewlett-Packard Enterprise in a deal which could set the US private equity firm back as much as $1.1 billion.

Blackstone is expected to pay 430 rupees ($6.49) per share in the acquisition for at least 84 percent of HP's 60.5 percent controlling stake in MphasiS.

The Bangalore-based firm will purchase the maximum amount left of the remaining 16 percent stake when permitted -- based on Indian securities law -- between signing and closing the deal.

The 16 percent stake must be an open offer sent to stakeholders due to the country's laws. At a higher prospective price, Hewlett-Packard Enterprise's (HPE) remaining stake is valued at approximately $825 million, but depending on how the offer is received, the final transaction could be worth up to $1.1 billion, or 70.71 billion rupees.

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The transaction is expected to close in the second half of 2016.

As reported by Reuters, at closing the deal would be the biggest to date in the country. Blackstone, however, is no stranger to closing large deals, with assets under management estimated at $334 billion.

HPE says the deal is not expected to impact the commercial relationship which has already been firmly established with the IT outsourcing firm and plans to renew current corporate agreements with MphasiS for another five years.

"While our financial relationship is changing, the business and commercial relationship with Mphasis remains an important part of our service delivery strategy," said Mike Nefkens, EVP and GM of HPE Enterprise Services. "We remain committed to our strategic partnership with Mphasis and to providing our customers with the high level of service and support they expect from HPE."

In December, Blackstone purchased a minority stake in India's IBS Software for $170 million.