Three suitors in race to buy Satyam

L&T, Spice & Tech Mahindra Queue Up For 51% Stake In Fraud-Hit IT Co

Chennai: Larsen & Toubro (L&T), Tech Mahindra and Spice Group are in race to buy a 51% stake in the beleagured Satyam Computer Services. These companies registered an interest to participate in the bidding as the deadline expired on Thursday. Infrastructure major L&T, which holds close to 12% in Satyam, was expected to bid, as was B K Modi-led Spice Group with interests in entertainment and communications. But the surprise was IT player Tech Mahindra.
    "Larsen & Toubro has registered its interest in participating in the bidding process set out by the board of Satyam Computer Services,'' the company informed BSE, where it is listed. Tech Mahindra said: "Once we (the company) have received the RFP and other information, we will evaluate and conclude on next steps.'' Spice Corp also made a separate announcement.
    This list of those in line to bid for Satyam includes Hinduja Group. News agency Dow Jones, however, reported that the Hindujas are not in the race. There is no minimum floor price for Satyam.
    The registered bidders will be sent an RFP (request for proposal) shortly and asked to submit a detailed expression of interest (EoI) together. The EoI should carry the proof of availability of funds to the tune of at least Rs 1,500 crore by 5:00 pm on Friday, March 20. Based on Thursday's stock price, a 51% stake in Satyam could cost around Rs 1,620 crore. The counter, however, slid 3.2% to close at Rs 47.20, at the bourses where it saw over 3.75 crore shares change hands.
    As per the bid process set out by Satyam, the acquirer would buy a 31% stake through new shares and then make a mandatory public offer to purchase at least 20% of the company. If the buyer fails to acquire 51% of Satyam after the open offer, the suitor will have the right to acquire more new shares to make up the shortfall.
    Analysts feel the entire process hinges upon the reconstituted accounts that are currently under way. Satyam chairman Kiran Karnik said last month that the company will share as much financial and customer information as is legally permissible with bidders. Based on submitted EoIs, eligible bidders would be shortlisted and given access to certain business, financial and legal diligence materials relating to Satyam, if they have executed a nondisclosure agreement, the company has said.
    The US-based financial conglomerate FMR, better known as Fidelity Investments, holds 11.7% stake in Satyam. Domestic insurers like state-owned LIC and ICICI Prudential Life too control over 1% stake in the tech company. Of 22 mutual funds that held shares in Satyam at the end of 2008, only three—namely Franklin Templeton MF, Taurus MF and UTI MF—hold some shares in the Hyderabad-based company. Taurus was the only one to increase holding in January, while the other two trimmed their holdings.
Is there a clash of interest for Tech Mahindra?
Rajesh Chandramouli | TNN
Chennai: Even as Satyam Computer kick-started the process to find a new owner, eyebrows were raised in corporate circles on the interest shown by Tech Mahindra. According to BSE filings by Tech Mahindra, the Indian promoters of the company—Mahindra & Mahindra—holds 44.18% in the company. Interestingly, Deepak Parekh, who is on Satyam's board as a government nominee, is also on the M&M board. Parekh did not respond to attempts by TOI to contact him for comments.