Tech Mahindra, an Indian IT firm part owned by BT, has won the bidding to buy a 51% stake in fraud-hit Satyam Computer Services for around $579 million.Having won the auction, Pune-based Tech Mahindra will buy 31% in Stayam at 58 rupees per share, valuing the stake at around $351 million. The buyer is then required to make a mandatory cash tender offer to buy another 20% from investors at the same price.
The deal comes three months after Satyam's founder and chairman B Ramalinga Raju resigned after admitting the company's profits have been falsely inflated for several years, leading to a $1 billion hole in the balance sheet.
Tech Mahindra beat engineering firm Larsen & Toubro and private equity outfit WL Ross & Co in the auction. BT, which holds a 31% stake in the company, has backed the deal. The acquisition will boost Tech Mahindra's workforce by around 48,000 to nearly 75,000, as it looks to compete with India's biggest IT outsourcing companies Infosys, Tata Consultancy Services and Wipro.
It also gains some blue chip clients, including Citi, although Satyam has reportedly lost dozens of customers in the wake of the scandal.The bid is subject to approval from the Company Law Board.
Goldman Sachs and Avendus Capital advised Satyam on the deal. Tech Mahindra was advised by Kotak Investment Banking and UBS.
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2 comments:
It came as quite a surprise to many that T-Mahindra bagged Satyam's stakes, considering that the front runners were Spice and
L & T who in fact held most of Satyam's stakes.
Another viewpoint is the fact that how T-Mahindra's share price rose first, then dipped with rumours around that they did not win the ownership and when they finally did their stock price rose again to around the Rs 368 mark.
Cheers
Yeah that's the exact situation where Tech Mahindra and other bidders were running the race for the ownership of Satyam. There's no doubt about the fact that Tech Mahindra's winning bid came as a surprise.
Cheers
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