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Tech Mahindra, partly owned by BT Group Plc Wins Bid for Satyam Computer!
By Amarendra Bhushan for CEOWORLD Magazine Updated:April 13, 2009
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Scam-tainted Indian software company Satyam Computer Services Ltd. Monday named a 17.56 billion rupees ($352.6 million) offer by a Tech Mahindra Ltd. unit as the highest bid for a 31% stake in the company.
L&T and Wilbur Ross, the other two contenders who remained in the fray till the end, are reported to have quoted conservatively. Spice Group had earlier announced its decision not to participate in the bidding process.
The deal is subject to statutory clearances from Sebi and the Company Law Board (CLB).
Tech Mahindra unit Venturbay Consultants Pvt. Ltd. will buy 302.76 million shares, and will have to make an open offer for 20% more of Satyam at a minimum price of 58 rupees per share.
Hyderabad-based Satyam, once India’s fourth-largest software exporter by revenue, is looking for a buyer to infuse funds and help revive the company.
The company has been in turmoil since founder B. Ramalinga Raju revealed in January that he had overstated Satyam’s profits over several years and created a fictitious cash balance of more than $1 billion.
L&T, which was one of the bidders for Satyam, will hold onto its current 12 per cent stake in the software company. L&T also has a six-month standstill agreement with Satyam board as part of the bid process.
Satyam, which serves customers such as GE, GM, Ford, Nestlé and Cisco and its estimated 50,000-strong workforce, will also help Tech Mahindra, in which Britain’s BT Group holds about 31 percent stake, build a better portfolio of customers.
Even as over 40 Satyam customers have either moved their projects, or are in the process of shifting to other vendors, leading companies such as GE, Nestle, Dupont, Nissan and National Bank of Australia continue to work with the scandal-hit company.
Corporate Affairs Minister Prem Chand Gupta is expected make the formal announcement later.
- Satyam was ranked India’s fourth-largest outsourcing firm and Tech Mahindra was sixth-largest.
- The Satyam buy will help Tech Mahindra to diversify its services by reducing its reliance on the telecoms industry.
- Tech Mahindra gets more than half its revenue from Europe, and the Satyam purchase would help it significantly expand its presence in the United States.
- Billionaire investor Wilbur Ross had bid at 20 rupees per share, while U.S.-based Cognizant Technology Solutions Co. had withdrawn from the process.
- Justice SP Bharucha was overseeing the sale process.
- Spice Corp, IBM and iGate are among those confirmed names that dropped out of the race after showing an interest in the company.
- Four bidders were expected to contest the sale, which aside from Tech Mahindra and L&T included US investor WL Ross and US-listed Cognizant Technology.
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