Nagarro CEO expects watchdog to probe share price jump before takeover bid announcement

June 29 (Reuters) - German software developer Nagarro's CEO said on Monday he expects the country's financial watchdog to investigate a surge in its share price ahead of the announcement of a proposed takeover by Indian rival Persistent Systems. Nagarro's share price surged almost 20% on Friday to €40.44, hours before the two companies announced the €1 billion ($1.4 billion) takeover bid after market close.

"I expect BaFin to investigate this and hope they will find out (what happened)," Nagarro Chief Executive Manas Human told Reuters.

BaFin declined to comment specifically on the matter. A spokesperson for the regulator said that it was continuously monitoring the market for any signs of market manipulation or the exploitation of inside information.

Nagarro's share price soared 90% on Monday to €76.85 by 0907 GMT, nearing Persistent's offer price of €81 per Nagarro share. Persistent's share price dropped nearly 11% to a near 15-month low, with analysts flagging excessive valuation, integration and margin dilution risks.

Human and Persistent's CEO Sandeep Kalra told Reuters that they had kept the teams working on the merger plans as small as possible.

"I would be very shocked" if it emerged that inside information had been exploited, Kalra said.

(Reporting by Alexander Huebner; Writing by Linda Pasquini; Editing by Emelia Sithole-Matarise)