Satyam drops Maytas deal on investors’ resistance

Satyam drops Maytas deal on investors’ resistance

New Delhi: Hit by the adverse market reaction, homegrown Satyam Computers on Wednesday called off its proposed $1.6-billion acquisition of two companies promoted by the IT major Chief Ramalinga Raju’s son.

Announcing the decision to call off the acquisition of Maytas Properties and Maytas Infrastructure “in light of the setback received from the investors community", Raju said: “We have been surprised by the market reaction to this decision even though we were quite positive about the merits of the acquisition."

“However, in deference to the views expressed by many investors, we have decided to call off these acquisitions," he said.

Also Read: Transcript of Satyam acquisition conference call (PDF)

The reversal comes within a day of the Satyam board approving the decision to acquire Maytas Properties for $1.3 billion and a majority 51% stake in Maytas Infrastructure for $0.3 billion.

Shortly after the announcement was made on Tuesday evening, the US-listed company had plummeted more than 55% on the American bourses reflecting rejection of the deal by the shareholders.

Even during the investors conference held after the board’s approval for acquisition, Raju faced tough questions from Institutional Investors in Satyam such as Reliance Mutual Fund, SBI Mutual Fund, Templeton Mutual Fund and CLSA, with some of them even threatening to oppose the deal.