Satyam's new board of directors, which met to select the highest bidder, chose Tech Mahindra following its bid of Rs 1,757 crore for 31 per cent stake in the scam-tainted IT giant.
Tech Mahindra offered Rs 58 for each Satyam share. Engineering major L&T and private equity firm WL Ross were among the other major contenders for the bid. L&T already holds 12.04 per cent stake in Satyam. While L&T’s bid was at Rs 45.90/share, WL Ross' bid for Satyam stood at Rs 20/share.
Earlier, all three bidders had qualified L&T, Tech Mahindra and Cognizant had qualified for the financial bidding stage after the technical bids were evaluated. Spice Corp, IBM and iGate were among those confirmed names that dropped out of the race after showing an interest in the company. iGate decided to drop out of the race for Satyam after concerns on falling revenues and not enough clarity on customers and margins. Spice Corp claimed that the bidding process lacked transparency and pulled out of the race.
At Rs 58 per share, Tech Mahindra will acquire a controlling stake of 51% in Satyam for Rs 2,889 crore, pegging the total value of the company at Rs 5,665 crore. In the first stage, Satyam will issue 30.27 crore shares to Tech Mahindra, representing 31% of the company’s share capital, which will infuse Rs 1,756 crore into the company. In the second stage, Tech Mahindra will make an open offer to Satyam’s existing shareholders for another 20%.
This new development will catapult Tech Mahindra to 5th position in terms of BSE market capitalization. Though as per many experts this deal will put Tech Mahindra in 4th position in the pecking order of IT firms as per revenues, after HCL Technologies... only time will tell if there is any Satya in revenues of Satyam.
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