Gaining control of fraud-plagued Satyam Computer Services would turn the joint venture Tech Mahindra into an outsourcing giant. Its offer values the company at about $1.2 billion.
(Mahesh Kumar A./ Associated Press)
Partners poised for control of Satyam
Gaining control of fraud-plagued Satyam Computer Services would turn the joint venture Tech Mahindra into an outsourcing giant. Its offer values the company at about $1.2 billion.
(Mahesh Kumar A./ Associated Press)
NEW DELHI - Tech Mahindra, a joint venture between Britain's BT Group and the Indian conglomerate Mahindra & Mahindra, is poised to become an outsourcing giant after submitting the top bid for fraud-battered Satyam Computer Services.
The offer values the company at $1.2 billion.
Tech Mahindra made the highest offer for Satyam at $1.16, a share, the board of Satyam said yesterday.
The offer topped bids from the Indian engineering firm Larsen & Toubro, which owns a 12 percent stake in Satyam, and from Wilbur Ross, an American venture capital investor.
The price is a 23 percent premium on Satyam's most recent closing, but represents a fraction of Satyam's worth a year ago. The company has been losing clients, investors, and employees since its chairman admitted to accounting fraud in January.
"The selection of the highest bidder, in a fair, open, and transparent process, signals a new stage for the company in its progress toward stabilization and growth," said the chairman of Satyam's board, Kiran Karnik. "We hope this will infuse greater confidence and comfort amongst customers."
In the terms of the sale, Tech Mahindra's bid is for 31 percent of Satyam.
Tech Mahindra would later make an offer for an additional 20 percent of Satyam shares on the open market, which would give it a controlling stake.
Cognizant Technologies, based in Teaneck, N.J., conducted a due-diligence review on Satyam but did not make a bid, people involved in the deal said.
A spokesman for Cognizant had no comment.
Satyam was one of India's largest information technology companies, with more than 50,000 employees and a market capitalization of more than $7 billion, before the chairman, B. Ramalinga Raju, said in January that he had faked about $1 billion in cash and inflated the company's operating margins.
Indian investigators have since said that more than a dozen people in the company's finance department were involved in the fraud.
Satyam serves as the back office and information technology provider for hundreds of companies, including General Electric. Indian officials must approve the transaction for it to be final.
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