SUMMARY
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MUMBAI, India – Indian firm Tech Mahindra announced its long-awaited buyout of IT outsourcer Satyam Computer on Wednesday, March 21, creating a new force in the sector with annual revenue of $2.26 billion.
Tech Mahindra bought a 42.7% stake in Hyderabad-based Satyam in April 2009 when the group was on the verge of collapse following an accounting scandal.
The company has since operated under the name Mahindra Satyam and has emerged from the crisis profitable, posting a net gain of 3.08 billion rupees ($61 million) for the last quarter of 2011.
The takeover of the remaining stake will involve an exchange of stocks, with Satyam shareholders receiving one Tech Mahindra share for every 8.5 Satyam share.
“The aim is to consolidate the information technology and related businesses and form a single entity, providing services to the sector,” a joint statement from the companies said.
Besides Satyam, four other wholly-owned Mahindra subsidiaries — Venturbay Consultants, C and S System Technologies, CanvasM Technologies and Mahindra Logisoft Business Solutions — will be considered for full integration.
Satyam Computer stunned corporate India in 2009 when its founder B. Ramalinga Raju admitted he had for years overstated profits and inflated the firm’s balance sheet by more than $1 billion.
The scandal nearly pushed Satyam into bankruptcy but Tech Mahindra, part of Indian auto and farm equipment manufacturer Mahindra and Mahindra, came to the rescue.
Raju, once a star of India’s software boom, is now on bail awaiting trial for conspiracy, cheating and forgery.
The new group will be India’s fifth-largest locally-listed software exporter by sales and have annual revenue of $2.26 billion and a market value of nearly $3.4 billion, according to Dow Jones Newswires. – Agence France-Presse
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