Tech Mahindra wins bid for Satyam
Tech Mahindra to pay $580m for 51% stake in Satyam
Tech Mahindra has been selected as the new majority stake holder in Indian services giant Satyam.
The IT telecoms services provider will pay 58 rupees, or $1.16 per share for an initial 31% stake, and will then purchase an additional 20% from the open market. The overall stake will cost Tech Mahindra some $580m, valuing Satyam at $1.1bn.
Tech Mahindra was the highest bidder in the race to take a majority stake in Satyam, which has been in financial difficulties since its ex-chairman Ramalinga Raju admitted falsifying accounts at the start of the year. The second highest bidder was Larsen & Toubro, with a bid of 46 rupees per share, followed by billionaire investor Wilbur Ross, who bid 20 rupees per share.
Tech Mahindra, a joint venture between British Telecom and the Mahindra & Mahindra conglomerate, has less than half the workforce of Satyam, and is focused almost completely on the telecoms sector. Acquisition of Satyam, which is still subject to regulatory approval, would massively expand both its skill set and its client base.
Kiran Karnik, chairman of the board of Satyam commented: “On behalf of all Satyamites and their families, we congratulate Tech Mahindra on being the highest bidder. The selection of the highest bidder, in a fair, open and transparent process, signals a new stage for the Company in its progress towards stabilization and growth. We hope this will infuse greater confidence and comfort amongst customers, who continue to be happy with Satyam's excellent service delivery. This event ought to dispel the anxiety of all stakeholders as it re-positions the Company’s commitment to revival and good governance.”
The bidding process for Satyam was conducted under the supervision of Justice Bharucha, who was appointed by the company to ensure a fair process. Bids were judged on their financial merits and other factors including standards of corporate governance and management track record, experience with distressed companies and strategic plans for Satyam going forward.