US-based IT major Virtusa Corporation is reportedly holding final discussions to buy Chennai-based Polaris Consulting and Services Ltd for Rs 1,904 crore.

Polaris is likely to have been valued at about $350 million, a 20% premium to its current market capitalisation of $295 million (Rs 1,904 crore), according to the sources familiar with the matter.

The final announcement of the deal is expected to come by the end of this month, sources told The Economic Times.

In the past six months, the stock price of Polaris has gone up by nearly 30% following the reports of formal sale of the company managed by global financial firm, Credit Suisse.

According to the sources, the Massachusetts-headquartered Virtuasa has "pipped Tech Mahindra, HCL Tech and Genpact to emerge as the frontrunner."

"We do not comment on market rumours. If and when we have announcements material to our business we will communicate that to our stakeholders, including media, at the appropriate time, using the appropriate channels," said a Virtusa spokesperson.

Sources said that Arun Jain, the founder chairman of Polaris, is likely to sell his entire stake in the company.

Jain holds 29% stake in the company, while Rohatyn Group (formerly Citi Venture Capital International) has 19% stake. Billionaire investor Rakesh Jhunjhunwala also acquired a 4.8% stake in the company.

Citigroup is the largest client for Polaris accounting for nearly 35% of its revenue.

With JP Morgan Chase, British Telecommunications and AIG Global Services as top clients, Virtusa earned $479 million in revenues last fiscal year and is sitting on a cash pile of $180 million.

Virtusa is expected to gain access to new clients in banking and financial services through the acquisition.

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