IGate backs away from Satyam bid; new CEO takes charge

IGate backs away from Satyam bid; new CEO takes charge
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First Published: Fri, Feb 06 2009. 12 08 PM IST
Updated: Fri, Feb 06 2009. 12 08 PM IST
Bangalore: A potential bidder for fraud-tainted India’s Satyam Computer Services backed away from a deal on Friday, a day after as the outsourcing company named a new chief executive and secured funding to help retain clients and employees.
US-based iGate Corp now has no interest in buying Satyam due to lack of clarity on liabilities of the company - snared in India’s biggest corporate scandal - Chief Executive Phaneesh Murthy told Reuters on Friday.
“I have very little interest or no interest left in this company right now,” said Murthy, who was previously the global sales chief at rival Infosys Technologies and spearheaded strong sales growth in the key US market.
Satyam has been battling for survival after founder and former chairman Ramalinga Raju disclosed last month profits had been overstated for years. Raju is now in jail pending trial.
On Thursday, Satyam’s government-appointed board named AS Murty, a company veteran of 15 years, as its new chief executive.
“My interest has progressively been coming down with every passing day. And my concern is that the restatement of financial statements will take anywhere from three to six months,” iGate’s Murthy told Reuters from Fremont, California.
iGate said last month it was keen to acquire Satyam, helped by private equity funds, joining other potential bidders including Larsen and Toubro, attracted by Satyam’s global clients.
Analysts say it is unlikely an outline for a bidding process could be framed until there is clarity on changes to India’s takeover rules and a restatement of Satyam’s accounts.
“The key is how fast the company gets the things sorted out, because as time passes the interest of potential buyers will keep coming down,” said Tejas Doshi, head of research at Sushil Finance.
Shares in Satyam, whose market value has plunged to about $670 million from $7 billion in May 2008, were up 5%.
Satyam’s board has named Goldman Sachs and India’s Avendus to find a strategic bidder for the company.
“We are not getting any comfort that the government will actually pick up liabilities and I think the government stand publicly is that they will not pick up any liability,” iGate’s Murthy said, referring to Satyam’s legal and other liabilities.
India’s Spice Group and the diversified Hinduja Group are among those who have shown interest to acquire Satyam, attracted by its 600-plus clients such as General Electric, Cisco and Coca Cola.
National Australia Bank, Australia’s largest lender, said on Thursday it would suspend new contracts awarded to Satyam
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First Published: Fri, Feb 06 2009. 12 08 PM IST
More Topics: Satyam | iGate | Takeover | Outsource | Fraud |