Monthly M&A Insider - Mergermarket

Asia-Pacific
INDIA
A lifeline for Satyam Computer Services
• Three months after Satyam’s founder Ramalinga Raju
confessed to overstating the company’s accounts, Tech
Mahindra was selected on 13 April as the highest bidder
to acquire a 31% stake in Satyam Computer Services at
INR 58 per share. The announcement must have come
as a huge relief to corporate India. Tech Mahindra will also
acquire a further 20% stake through an open offer to the
public shareholders. If Tech Mahindra fails to garner enough
acceptances in the open offer, then the Satyam board will
issue additional shares to bring Tech Mahindra’s holding to
51%.
• The offer from Tech Mahindra values the share capital of
Satyam at INR 56.6bn ($1.132bn), a stark contrast from its
all-time high market cap of INR 366.4bn ($8.565bn) on 30
May 2008. Other bidders who were in the fray for the stake
in Satyam were Larsen & Toubro and WL Ross & Co. The
second highest bid was from Larsen & Toubro at INR 45.8
per share, while WL Ross & Co offered INR 20 per share.
• For a company like Tech Mahindra, which has a niche in
telecom outsourcing, this is a great opportunity for it to
diversify into other sectors of outsourcing such as financial
services, healthcare, and manufacturing. The next step
for Tech Mahindra would be to restore confidence in the
stakeholders of Satyam including employees and clients of
the firm.
Asia-Pacific
Monthly M&A report – 42