Tech Mahindra’s open offer gets poor response from shareholders

Tech Mahindra’s open offer gets poor response from shareholders
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First Published: Thu, Jul 02 2009. 12 31 AM IST
Updated: Thu, Jul 02 2009. 12 31 AM IST
Bangalore: IT services provider Tech Mahindra Ltd hasn’t received a significant response to its tender offer to purchase 20% of Satyam Computer Services Ltd from shareholders, chief financial officer Sonjoy Anand said.
Tech Mahindra on 13 April agreed to pay Rs58 a share for a 31% stake of Satyam, outbidding billionaire Wilbur Ross and Larsen and Toubro Ltd at a sale. The offer to purchase the additional stake in the company for the same price ended on Wednesday.
Shareholders can sell in the market, why should they sell in the open offer, Tarun Sisodia, a Mumbai-based analyst at Anand Rathi Financial Services Ltd, said over the telephone. He recommends investors buy Tech Mahindra.
Satyam rose 3.2% to close at Rs73.25 in Mumbai trading, extending gains to 55% since a state-appointed board announced the winning bid for the sale. Tech Mahindra climbed 2.1% to Rs747.55, while the benchmark Sensitive Index gained 1%.
The insignificant response from shareholders may now prompt Tech Mahindra to use the cash it had set aside for the tender offer to acquire fresh shares of Satyam, Anand said in a telephone interview on Wednesday. “It would be a little less than 44% based on the same amount of funds which were to go into the open offer. We will be getting on with it quickly now.”
Satyam was put on sale by the state-appointed board after the firm’s founder, B. Ramalinga Raju, said on 7 January he’d overstated its assets by at least $1 billion, triggering a stock collapse.
It is not mandatory for them to buy more than 31%, Sisodia said. Now that they are putting more money, they are showing more commitment. Down the line if they merge Satyam with Tech Mahindra, the money will come back.
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First Published: Thu, Jul 02 2009. 12 31 AM IST