Satyam stake sale draws 3 suitors

MUMBAI: Larsen & Toubro Ltd, India's biggest engineering firm, and Tech Mahindra Ltd are competing for control of Satyam Computer Services Ltd in the first stage of the sale of the fraud-hit software exporter.

Larsen, Tech Mahindra and Spice Corp registered their interest in bidding for a 51 per cent stake in Satyam before the deadline yesterday, the companies said in separate announcements. India's government is pushing for the sale two months after Satyam founder Ramalinga Raju admitted he'd inflated more than US$1 billion (RM3.69 billion) of the company's assets.

Satyam's state-appointed board is hoping a sale will restore investor confidence and retain clients including Cisco Systems Inc and Sony Corp after Satyam lost US$1.7 billion in market value in two months. Raju's admission forced Satyam to restate its accounts and sparked lawsuits from shareholders in the US.

Due diligence "is the key factor if they want a successful bidder", said R.K. Gupta, managing director of Taurus Asset Management Co in New Delhi.

Satyam dropped 3.6 per cent to 47.05 rupees (100 rupees = RM7.50) in Mumbai trading, valuing the controlling stake at about 16.2 billion rupees.

"We have submitted our expression of interest," Mumbai-based Larsen spokesman Deepak Morada said by telephone yesterday. Tech Mahindra said it had registered its interest in a statement to the Bombay Stock Exchange.

Spice, which according to its website has interests in entertainment and communications technologies, has also registered its interest, chairman B.K. Modi said by telephone.

Under terms of the bid, qualified companies must prove they have at least 15 billion rupees available. The acquirer would buy a 31 percent stake through new shares and then make a mandatory open offer for at least 20 per cent of the company.

If the buyer fails to acquire 51 per cent of Satyam after the open offer, the suitor will have the right to acquire more new shares to make up the shortfall. The controlling investor won't be allowed to sell its stake in Satyam for three years. - Bloomberg