Report: Blackstone Looking to Buy Mphasis from HPE for More Than $1 Billion

The private equity owner of Optiv Security could pay more than $1 billion to acquire solution provider Mphasis from Hewlett Packard Enterprise, according to a media report.

The Economic Times reported that New York-based Blackstone Group is favored to acquire a majority stake in the $1 billion, Bangalore, India-based solution provider after submitting a binding offer worth more than top competitor Apollo Global Management of New York. Blackstone is looking to keep CEO Ganesh Ayyar and other members of the current management team, according to the report.

HPE is expected to finalize and get back to Blackstone on its offer in the next 10 to 15 days, sources told The Economic Times. Blackstone last week raised its binding offer for a 60.4 percent stake in Mphasis to help ensure it comes in higher than Apollo.

[Related: Report: Indian Firm Pulls Out Of Running For Mphasis]

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Blackstone might be willing to pay 10 percent to 12 percent more than Mphasis' current trading price to acquire a controlling stake in the company, analysts told The Economic Times. The world's largest private equity fund has already tied up financing for the Mphasis deal from Deutsche Bank, Standard Chartered and ING.

Mphasis' stock soared 6.6 percent Thursday to $7.51 per share. The Economic Times report came out before India’s National Stock Exchange (NSE) opened Thursday.

An HPE spokesman and a spokeswoman for Mphasis said their companies do not comment on rumors or speculation, while a spokesman for Apollo declined to comment. Blackstone did not respond to requests for comment.

Earlier this month, Pune, India-based technology services firm Tech Mahindra dropped out of the Mphasis auction process to avoid a bidding war with other suitors, according to Business Standard, an Indian news website.

Blackstone has more than $311 billion under management and has made $522 million of technology-sector investments in the past six months, according to The Economic Times.

Blackstone's most notable stateside channel investment came in March 2014, when the firm bought a majority stake in Denver-based security solution provider Accuvant. Six months later, Blackstone brought Accuvant and FishNet Security together and became the majority owner of Optiv Security, No. 26 on the CRN Solution Provider 500, the world’s largest pure-play security firm in the channel.

Blackstone was also rumored to be pursuing a leveraged buyout of CSC in late 2014, but the Falls Church, Va.-based company -- No. 5 on the CRN Solution Provider 500 -- ultimately ended up splitting into two separate companies, with one focused on its commercial business and the other on its U.S. government business.

Hewlett-Packard nearly began work two years ago to sell Mphasis, the Times of India reported in January, but ultimately held off for internal reasons. Mphasis has shifted its business away from the Palo Alto, Calif.-based vendor over that time, with Hewlett-Packard going from accounting for 70 percent of Mphasis' revenue three years ago to just 24 percent as of December 2015.

Mphasis has been enjoying success in recent months, with year-over-year sales up 5 percent for the nine months ending Dec. 31, to $710.5 million. Profits for the nine-month period were up 3.6 percent, to $77.4 million.