Sale over: Satyam looks attractive due to marquee clients
TECH MAHINDRA won a bidding auction for fraud-hit Satyam Computer Services today, in a deal that could lift the mid-sized outsourcer into the top tier of local software services firms.
Satyam said Tech Mahindra agreed to buy a 31 per cent stake at Rs58 ($1.16/£0.78) per share - a 23 per cent premium to Satyam’s last closing price - edging out bids from engineering conglomerate Larsen & Toubro, which had been seen as a front-runner, and US-based outsourcing firm Cognizant Technology Solutions.
Local television said the 51 per cent stake would cost Rs28.9bn ($580m/£395m).
Tech Mahindra shares surged by as much as 25 per cent after Larsen & Toubro, which owns 12 per cent of Satyam, was reported to have dropped out of the bidding, but trimmed their gains to trade 14 per cent higher by 0705 local time.
Satyam shares were up 6.4 per cent after earlier jumping 16 per cent to a nine-week high.
Satyam’s government-appointed board met in Mumbai to go over the bids submitted for a 51 per cent stake in the outsourcing company. The winning bid has to be approved by the Company Law Board (CLB), which said it expected Satyam to seek approval within 2-3 days.
Analysts have said Satyam looks attractive due to its long list of marquee clients and after a plunge in its market value caused by the $1 billion-plus fraud.
The winning bidder would buy a 31 per cent stake in Satyam through a preferential allotment of new shares, and then make a public offer to buy 20 per cent more, as required by Indian law.
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