Satyam sale process under way as bidders register
Written on March 13, 2009
At least three Indian companies may bid for a majority stake in Satyam Computer Services Ltd, the fraud-hit Indian outsourcer looking for a strategic investor.
Engineering and construction company Larsen & Toubro, IT services company Tech Mahindra, and diversified Spice Group all said they had registered their interest in a 51 percent stake in Satyam by a Thursday deadline.
Satyam’s government-appointed board is keen to bring in an investor to restore confidence among its 50,000-strong staff and more than 600 customers, which include General Electric and Qantas Airways, after the company was hit by India’s biggest corporate scandal.
Its strong client base and workforce are key attractions, but analysts said final bids would depend on clarity on Satyam’s finances and legal liabilities.
Hinduja Group, which had expressed an interest in acquiring Satyam, decided not to bid, its finance director Prabal Banerjee told Reuters. He did hot give a reason.
Bidders now have to submit a detailed expression of interest and show availability of at least 15 billion rupees ($290 million) by March 20.
“We will see many companies registering their interest by the end of the deadline today, but it remains to be seen how many of them will stay the course after the due diligence,” said Tejas Doshi, head of research at Bombay-based Sushil Finance guaranteed online payday loans.
Satyam has said it would provide shortlisted bidders access to business, financial and legal information.
“Unless the Satyam board makes available enough data based on which a buyer can put a value to the company, I don’t think there will be many left in the final stages of bidding to take a shot in the dark,” Doshi said.
Satyam has been struggling for survival since founder and chairman Ramalinga Raju shocked investors in January, saying Satyam’s profit had been overstated for years and assets falsified.
The government intervened and appointed board members, and state-run financial companies have provided funding to the beleaguered firm. Raju, the managing director, and the chief financial officer all quit and were later arrested.
Goldman Sachs and Indian investment bank Avendus have been hirted to look for potential investors.
FOREIGN BIDDERS?
Satyam, whose shares jumped nearly 40 percent in the prior two sessions, closed 3.2 percent lower at 47.20 rupees on Thursday. The company’s market value has plunged to around $600 million from $7 billion last May.
Tech Mahindra said in a statement it would evaluate its next step based on information received from Satyam.
Filed in: legal.