Monday March 09, 2009

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By Sam Devraj  ( Assistant Editor )

Satyam launches bidding process; stock jumps

SATYAM Computer Services Limited kicked off a bidding process today to sell a majority stake in itself and two potential suitors quickly confirmed they would join the race for the fraud-hit outsourcer. Shares in Satyam jumped as much as 19 per cent after gaining 20 per cent on Friday (March 6), valuing the company at about $650m (£468m), still just a fraction of the $7bn (£5.3bn) it was worth last May. The broader market was down more than 2 per cent. “Nobody would like to take a short in the dark, so the final bid price and outcome will clearly depend on the kind of information they are able to get about the company,” said Tarun Sisodia, a Mumbai-based analyst at Anand Rathi Financial Services. Satyam’s government-appointed board is keen to bring in an investor to restore confidence among its roughly 50,000-strong staff and more than 600 customers, which include General Electric and Qantas Airways. Analysts said bidders were attracted by Satyam’s strong client base and its large workforce but setting a bidding price would be difficult without any audited accounts and clarity about its liabilities. Satyam said in a statement bidders need to submit their interest by Thursday (March 5) to buy a 51 per cent stake. The bidders will then be asked to submit a detailed expression of interest and provide availability of at least Rs15bn ($290m/£209m) by March 20. India’s top engineering firm, Larsen & Toubro Limited, which controls about 12 per cent of Satyam, will put in an expression of interest, but a formal bid will depend upon clarity on financial statements and the extent of Satyam’s liabilities. “It is not possible for us to say that at any cost we will bid,” YM Deosthalee, chief financial officer at Larsen & Toubro, told a private television channel. New York-listed Satyam said qualified bidders will be shortlisted and given access to certain business, financial and legal materials and after completion of the due diligence process, bidders would need to submit their financial bids. Satyam faces class-action lawsuits from US shareholders that any new owner would have to assume some degree of liability for. Another potential suitor diversified Spice Group said it would submit an expression of interest, but the Hinduja Group declined comment on whether it would join the race.

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