The Channel logo

News

By | Team Register 14th April 2009 08:54

Satyam sold to BT-backed Indian firm

Bargain buy or pig in a poke?

Tech Mahindra looks set to seize control of Satyam - the almost terminally troubled Indian outsourcer.

Tech Mahindra has paid $351m for a 31 per cent stake in the firm - on top of the 31 per cent it already owned. This gives a rough value for Satyam of $1bn, a good premium on its current share even if it is only a fraction of what it was worth a few months ago. Its share price collapsed after it was banned from bidding for World Bank projects and company founder Ramalinga Raju admitted fixing the books over the course of years. Part of the problem for any buyer is the lack of definite accounts.

Satyam's board of directors considered three bids and considered them on corporate governance skills, experience running troubled companies and strategic plans for the firm. Tech Mahindra now has until 21 April to get the money into an escrow account for the deal to progress.

There was no bid worth 90 per cent of Tech Mahindra's so there will be no second round of bidding, assuming TM fulfills its obligations.

BT owns 31 per cent of Tech Mahindra. BT also provides a big slice of TM's revenue. In its annual report for 2007-2008 Tech Mahindra said: "BT continues to be our key customer. We further strengthened this strategic partnership by signing a five year deal valued in excess of US$350 Million to provide Application Support & Maintenance". Tech Mahindra made revenues of $935m and EBITDA of $205m in 2008.

Two board members, Deepak Parekh and Mr. S.B. Mainak, absented themselves from discussions because of possible conflicts of interest.

The official statement is here. ®

comment icon Read 2 comments on this article alert Send corrections

Opinion

Privacy image

Frank Jennings

Two working parties, ministers galore... but data transfer law remains in limbo
EMC_Unity_bezel

Chris Evans

It does simplify the hardware setup, whatever it is
A microscopic view of the biometric shark skin. Pic: James Weaver

Chris Mellor

Do something and stop faffing about in the bush league

Kat Hall

International system in general needs greater transparency

Features

Nerd fail photo via Shutterstock
Shouting match
Single market vs. rest of the world
hacker
Mostly it's financial crime. Here's what all the cool kids' terms mean in English
Apple logo. Pic: Blake Patterson
Plenty of bumps in the 40-year road for Mac makers