Tech Mahindra wins bid for Satyam Computer
Tech Mahindra, the IT arm of auto major Mahindra and Mahindra, on 13th April 2009, won the bid for India's fourth largest software exporter Satyam Computer.Tech Mahindra's winning bid was of Rs.1,757 crore ($351.4 million) for 31 percent stake in the scam-tainted IT giant. Tech Mahindra offered Rs.58 for each Satyam share.
Engineering major Larsen and Toubro (L&T) lost out. L&T already holds 12.04 percent stake in Satyam. The present six-member Satyam board is headed by Kiran Karnik, former president of NASSCOM. Other Board members include HDFC chairman Deepak Parekh, former SEBI member C. Achuthan and CII mentor Tarun Das.
It is good news not only for Satyam and its employees but the entire Indian IT market. The acquisition will help Tech Mahindra, to diversify into new areas instead of just depending on the telecom sector.
The Satyam acquisition will help Tech Mahindra diversify its software services business, and compete aggressively with bigger rivals such as TCS, IBM, Infosys and Wipro. Satyam, which already serves customers such as GE, GM and Ford, will also give Tech Mahindra a better portfolio of customers.
Highlights of Tech Mahindra's winning bid for Satyam
- Acquiring company: Venturbay Consultants Pvt Ltd, a Tech Mahindra subsidiary
- Price at which acquisition of 31-percent stake approved: Rs.58 per share
- Number of shares constituting 31 percent: 302,764,327
- Amount raised by way of 31-percent stake: Rs.1,756 crore ($351 million)
- Money to be deposited in an escrow account by April 21
- If not, next highest bidder will be considered
- Larsen and Toubro and consortium of Wilbur Ross-Cognizant were also in fray
- Tech Mahindra to make open offer of 20 percent at Rs.58 per share
- After open offer, total stake held cannot be more than 51 percent
- Subscribers of American depository shares also eligible for open offer
- Open offer to be made within 55 days
- Company Law Board exemption for shareholder approval on preferential offer
- Financial advisers: Goldman Sachs and Avendus Capital
- Satyam board says no other bidder within 90 percent of Tech Mahindra's offer
- Satyam board and Tech Mahindra execute share subscription pact
- Two directors - Deepak Parikh and S.B. Mainak - abstained from decision.
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