EDS-India to merge with MphasiS, to up stake to 61.8%

New Delhi, July 26 (UNI) MphasiS, leading IT services and BPO solutions provider, today said it has approved the merger of Electronic Data Systems (EDS) India, a wholly-owned subsidiary of EDS, into MphasiS BFL Ltd, allowing EDS to consolidate its operations in India.

The process of operationally integrating EDS-India into MphasiS, is expected to complete by the end of this calendar year, but would be effective from 1 April, 2006, as per the merger proposal approved by the boards of both the companies.

The proposal is subject to approval of the stock exchanges, shareholders of both companies and the High Courts at Mumbai and Karnataka. Through this merger EDS' stake in MphasiS will increase to approximately 61.8 per cent from about 51.4 per cent at present.

''This is the next step towards the integration of the operations of MphasiS and EDS. Essentially, we're creating a new family with EDS and MphasiS as one entity, with combined operations and one voice to provide greater efficiency. The operating plan will leverage the strong capabilities resident in both companies to better address market needs,'' MphasiS and EDS Service Delivery Operations Vice President and Chairman Steve Heidt said.

The merger is seen an 'and-and' proposition that creates mutual growth opportunities while immediately heightening EDS' presence in a primary growth location.

MphasiS CEO Jerry Rao said, ''The combined entity will help us achieve an optimal business model in India and provide clear career paths and opportunities for all employees as we also enhance the service offering to our clients.'' The swap ratio of the merger, as determined by an independent valuation of the two companies, works out to 5:4 (5 shares of MphasiS for every 4 shares of EDS-India). The merger is also expected to be EPS accretive to MphasiS and will enhance shareholder value.

EDS currently employs more than 3,000 people in India and has Applications&BPO delivery centers in Chennai, Pune, Gurgaon and Mumbai. EDS India reported revenues of around 78 million dollars for the year ended 31 March 2006.

The combined entity will have an employee strength of over 15,000, making it one of the larger IT and BPO employers in the country. EDS and MphasiS had earlier announced that they plan to grow this to about 20,000 employees by the end of calendar 2006.

MphasiS BFL Limited is a leading applications and BPO services company based in Bangalore and currently has about 12,000 employees, including 11,000 in India.

MphasiS serves clients in multiple industries, including financial services, transportation, technology and healthcare, and is particularly strong in the retail banking sector serving the world's top five banks.

EDS reported revenues of 19.8 billion dollars in 2005.

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