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TECH Mahindra on Wednesday announced an open offer to acquire an additional 20% equity in the troubled IT company, Satyam Computer Services. The offer, if completed successfully, will raise Tech Mahindra's stake in the Hyderabad-based company to 51%.
The move followed market regulator Sebi relaxing on Wednesday the takeover code to facilitate the acquisition. Among other things, Sebi has exempted Satyam from providing the status of corporate governance while making a public announcement under the code. Pursuant to the order, Satyam has been exempted from providing due diligence certificates by merchant bankers and disclosing its latest financial data in the offer document, as required under the takeover regulations.
Tech Mahindra plans to acquire 19.9 crore shares at a price of Rs 58 a share, which is at a 24% premium to the current stock price. Satyam Computer Services slipped 4.2% to Rs 46.9 while Tech Mahindra was down 3.7% at Rs 306 on Wednesday. The offer will be made by Venturbay Consultants, an arm of Tech Mahindra, which is on course to become the new owner of the firm. Kotak Mahindra Capital Co is the lead manager to the offer, which will be open for subscription between June 12 and July 1, 2009.
Tech Mahindra will initially invest Rs 1,756 crore to acquire a 31% stake through a preferential allotment. It will spend Rs 1,155 crore to buy the 20% equity through the proposed open offer. Tech Mahindra has an option to raise the open offer price, seven days before its closure, under Sebi guidelines. If the offer is not fully subscribed, the company will be allowed to acquire additional shares through a second preferential allotment.
The shares acquired through preferential allotment and open offer will be subject to lock-in period of three years.
The move followed market regulator Sebi relaxing on Wednesday the takeover code to facilitate the acquisition. Among other things, Sebi has exempted Satyam from providing the status of corporate governance while making a public announcement under the code. Pursuant to the order, Satyam has been exempted from providing due diligence certificates by merchant bankers and disclosing its latest financial data in the offer document, as required under the takeover regulations.
Tech Mahindra plans to acquire 19.9 crore shares at a price of Rs 58 a share, which is at a 24% premium to the current stock price. Satyam Computer Services slipped 4.2% to Rs 46.9 while Tech Mahindra was down 3.7% at Rs 306 on Wednesday. The offer will be made by Venturbay Consultants, an arm of Tech Mahindra, which is on course to become the new owner of the firm. Kotak Mahindra Capital Co is the lead manager to the offer, which will be open for subscription between June 12 and July 1, 2009.
Tech Mahindra will initially invest Rs 1,756 crore to acquire a 31% stake through a preferential allotment. It will spend Rs 1,155 crore to buy the 20% equity through the proposed open offer. Tech Mahindra has an option to raise the open offer price, seven days before its closure, under Sebi guidelines. If the offer is not fully subscribed, the company will be allowed to acquire additional shares through a second preferential allotment.
The shares acquired through preferential allotment and open offer will be subject to lock-in period of three years.
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