The Blackstone Group L.P. (BX) announced that it has made a bid to take over Pactera Technology International Ltd. (PACT), a U.S. listed Chinese company. The deal has been valued at $680.4 million.
Blackstone has offered $7.50 per share for the U.S. traded shares of Pactera. This deal would result in Pactera being converted into a private firm and subsequently lead to its delisting from the NASDAQ. However, the proposal is under review by a special committee comprising independent directors formed by Pactera.
Blackstone made the non-binding proposal to Pactera through its global private equity fund worth $16.2 billion. This is the biggest buyout fund in the world.
Pactera, the largest technology outsourcing firm of China, was formed in 2012 through a merger of HiSoft Technology International Ltd and VanceInfo Technologies Inc. The Beijing-based company offers technology outsourcing and consultancy services to blue-chip companies located worldwide.
Of late, private equity firms have indulged in buyouts of U.S.-listed Chinese companies.This trend comes owing to the delisting of Chinese companies that have gathered momentum as a result of accounting irregularities and frauds. This has further affected other U.S. listed Chinese firms.
Recently, Citic Capital Partners entered into an agreement with U.S.-listed Chinese I.T. services firm, AsiaInfo-Linkage, Inc. (ASIA) to purchase the latter. The deal was sealed for $890 million.
Earlier in Apr 2013, shareholders of Focus Media Holding Ltd. (FMCN), a Chinese advertising company, entered into an agreement with private equity firm Carlyle Group to acquire the former. The deal was sealed for $3.7 billion, which to date has been the biggest leverage buyout in China.
The deal is expected to boost Blackstone’s revenues due to China’s rapid economic growth, which attracts investors to private equity. However, unsatisfactory returns might hamper the company’s growth going forward.
Blackstone currently carries a Zacks Rank #3(Hold).
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