Hederabad: The Company Law Board (CLB) on Thursday approved the purchase of a 31% stake in fraud-hit Satyam Computer Services Ltd by a unit of Tech Mahindra Ltd, voicing confidence that the sale process had been sufficiently transparent and likening the acquisition to the adoption of an orphaned waif.
The move by the semi-judicial corporate regulatory body paves the way for an open offer by the unit, Venturbay Consultants Pvt. Ltd, to buy an additional 20% stake in Satyam from minority shareholders. Tech Mahindra won a bidding contest for Satyam on Monday.
“I accept the recommendation to induct Venturbay as the strategic investor, with the hope, that, by adopting the best corporate governance practices, Venturbay would, over the years make Satyam to regain its glory in real terms,” CLB chairman S. Balasubramanian said in an order.
Tech Mahindra, a mid-sized outsourcing firm from the Mahindra group, has time until 21 April to deposit Rs1,756 crore for the 31% stake.
Including the mandatory 20% open offer, Tech Mahindra will need to pay about Rs2,900 crore for the purchase at Rs58 per share.
“We are pleased with the Honourable Board’s decision,” Vineet Nayyar, vice-chairman and chief executive officer of Tech Mahindra, said in an emailed statement. “This takes us one step closer to achieving our objectives. We look forward to complete the next steps of the bid process.”
Satyam has been at the centre of India’s biggest corporate fraud investigation after founder B. Ramalinga Raju on 7 January confessed to having cooked the company’s books over several years to the tune of Rs7,136 crore.
On Thursday, CLB chairman Balasubramanian described the acquisition of the company by Tech Mahindra as “adoption of orphan Satyam” in his order. He dismissed apprehensions about a lack of transparency in the bidding process. Former Supreme Court chief justice S.P. Bharucha had “given in writing that the process of selection was fair, transparent and open as required”, he said.
PTI and Mint’s Sangeeta Singh contributed to this story.