Tech Mahindra gets control of Satyam Computer Services (Lead)

April 13th, 2009 - 4:14 pm ICT by IANS  

Mumbai, April 13 (IANS) Tech Mahindra, the IT arm of Mahindra and Mahindra (M&M), will be the new owner of the fraud-hit Satyam Computer Services with a controlling stake through its subsidiary Venturbay Consultants.
In a regulatory filing to the Bombay Stock Exchange (BSE) Monday, India’s fourth largest software major said Venturbay had emerged as the highest bidder by offering to purchase 302,764,327 Satyam shares or 31 percent of its total shareholding for Rs.1,756 crore (Rs.17.56 billion/$351 million) at Rs.58 per share.

The government-appointed six-member board met here earlier in the day to select Tech Mahindra’s subsidiary as the strategic investor. Two directors, Deepak Parekh and S.B. Mainak, however, abstained from the decision; Parekh sits on M&M’s board, while Mainak is the executive director of a significant shareholder of another bidder.

In pursuant of the share subscription agreement signed by the winning bidder and the board, Tech Mahindra will have to make an open offer of 20 percent at Rs.58 per share for the controlling stake (51 percent).

As part of the agreement, Tech Mahindra will have to deposit the bid amount in an escrow account by April 21.

Subscribers of the Hyderabad-based Satyam’s American depository shares will also be eligible for the open offer at $1.16 based on the exchange rate of Rs.50 to $1 within 55 days.

The board will inform the Company Law Board (CLB) that Tech Mahindra had emerged as the winning in the bidding process. The CLB approval is expected in a week.

Engineering major Larsen and Toubro (L&T) and consortium of Wilbur Ross-Cognizant

were the other two bidders, with the B.K. Modi-owned Spice group having withdrawn from the bidding process earlier.

The global competitive bidding process, initiated March 9 in accordance with the CLB and the regulatory body - Securities Exchange Board of India (SEBI) - was supervised by former Chief Justice of India S.P. Bharucha.

Goldman Sachs and Avendus Capital were the two financial advisers appointed by the board to vet the bidding process.

“The selection of the highest bidder, in a fair, open and transparent process, signals a new stage for the company in its progress towards stabilisation and growth,” board chairman Kiran Karnik said.

According to him, the takeover would “infuse greater confidence and comfort amongst customers to remain 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,” Karnik added.

Bharucha evaluated the technical bids based on pre-determined criteria submitted by the three bidders. The technical criteria covered information on the bidder, its promoters and persons acting in concert.

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