American IT services firm iGate has acquired Indian outsource company Patni in a deal worth $1.22 billion.
iGate said it would pay $921m to buy a 63% stake in the Mumbai-based firm from the founders and private equity company General Atlantic.
Phaneesh Murthy, CEO of iGate Corporation, said the deal will put the company above the billion dollar revenue threshold.
One industry source said: "Interesting, but frankly I'd never heard of IGate. However Patni is a good quality but under-sized Indian player."
Anthony Miller, analyst at Tech Market View, said the deal is all about growth and scale. "At some $250m in last 12 months' revenues, iGate is little over a third the size of Patni ($690m) but grew 31% vs Patni's 5%. Neither, therefore, had much hope of breaching the 'magic' billion-dollar barrier organically any time soon. And you really do need to be a billion-dollar company (OK, $940m) to play with the big boys on the big deals," he said in a blog post.
iGate has long expressed interest in expanding into the Indian outsourcing market. In March 2009, iGate considered buying Satyam, the fraud-hit Indian company.