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Satyam gets nod to sell majority holding

Satyam gets nod to sell majority holding
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First Published: Sat, Mar 07 2009. 12 34 AM IST

 Front-runner: IBM’s corporate headquarters in the US.
Front-runner: IBM’s corporate headquarters in the US.
Updated: Sat, Mar 07 2009. 12 34 AM IST
Bangalore: Satyam Computer Services Ltd has won approval to sell a majority stake in itself as the company at the centre of India’s biggest corporate fraud inquiry seeks to restore confidence with investors and clients. The shares rose.
Market regulator Securities and Exchange Board of India approved plans for Satyam to sell 51% of the firm, the Hyderabad-based software services provider said on Friday.
Front-runner: IBM’s corporate headquarters in the US.
International Business Machines Corp. (IBM), the world’s largest computer services provider, and Larsen and Toubro Ltd (L&T), India’s biggest engineering and construction firm, are the leading contenders to buy Satyam, Global Equities Research Llc. had said in a report on 24 February.
Karen Davis, a Shanghai-based spokeswoman at IBM, declined to comment. L&T hasn’t yet decided whether it will bid for Satyam, chief financial officer Y.M. Deosthalee said on Friday. The Mumbai-based company, which owns 12% of Satyam, needs more details on the bidding process, he said, without elaborating.
Spice Corp., with businesses in entertainment and communication technologies, according to its website, will bid for a 51% stake in Satyam, chairman B.K. Modi said by phone from London on Friday. Spice, which in January offered Rs2,000 crore to buy control of the Indian software provider, will bid for Satyam on an as-is-where-is basis, Modi said.
Satyam shares rose 20% on Friday, valuing the company at Rs2,840 crore. Its state-appointed board is expediting the sale to woo back investors after founder and former chairman B. Ramalinga Raju said in January he had fudged the company’s account books by at least Rs7,136 crore, pushing down the stock by 76%.
“This means that the process can now move forward because the more Satyam delays, the greater the risk that customers will desert it,” Apurva Shah, head of research at Mumbai-based Prabhudas Lilladher Pvt. Ltd, said.
Satyam gained Rs7.05 to close at Rs42.15 in Mumbai trading on Friday, the most since 27 January, while the Bombay Stock Exchange’s benchmark Sensex rose 1.6%. The stock has lost 90% of its value in the past year, while the Sensex has declined 50%.
Bidders, aiming to gain Satyam’s workforce of about 40,000 employees and customers, including Cisco Systems Inc., may face the challenge of making offers before the Indian company restates its financials. The buyer will also have to consider potential liabilities from lawsuits filed against Satyam in the US.
Under the terms of the global auction, potential investors should have net assets of at least $150 million (Rs773 crore), according to Satyam’s statement. The winning bidder would purchase a 31% stake through new shares and then make a mandatory open offer to buy at least 20% of the company, it said.
If Satyam’s buyer fails to acquire 51% of the company after the open offer, the suitor will have the right to buy more new shares to make up the shortfall, the software provider said.
The investor acquiring control won’t be allowed to sell its holding for three years, the statement said.
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First Published: Sat, Mar 07 2009. 12 34 AM IST
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