Menu
Satyam buyer does not get enough shares in public offer

Satyam buyer does not get enough shares in public offer

Tech Mahindra may have to ask Satyam for a preferential issue of equity

Tech Mahindra may have to ask Satyam Computer Services for a preferential issues of shares to continue its bid to take over the troubled outsourcer.

Tech Mahindra did not get an adequate response for its open offer to shareholders of Satyam, which closed on Wednesday, a company spokesman said on Friday.

Tech Mahindra, which acquired a 31 percent stake in the scandal-ridden Indian outsourcer through a preferential allotment of equity, made an offer last month for an additional 20 percent stake to be bought from the company's shareholders.

Tech Mahindra won the bid in April to acquire a majority stake in Satyam, which was plunged into a financial crisis in January after its founder B. Ramalinga Raju said that the company's revenue and profits had been inflated for several years.

However the public offer price agreed in the bid agreement in April fell far short of the current market price of Satyam's shares.

The share price started moving up in June after the company released unaudited results for the fourth quarter of last year, and for January and February this year. The results showed that Satyam's revenue and profits were down in the fourth quarter from a year earlier.

But the company posted a larger profit of 520 million Indian rupees (US$10.8 million) in February, while in January when it profited only 40 million rupees.

The company's share price also received a boost after Tech Mahindra moved to take charge of the company.

The share price has hovered at over 70 rupees, far higher than the public offer price of 58 rupees. Satyam shares closed at 77.2 rupees on Thursday on the Bombay Stock Exchange (BSE).

In a filing to the BSE on Wednesday, Tech Mahindra said that the registrar of the open offer, in consultation with Tech Mahindra and its agents, is in the process of counting the shares tendered by the public.

The company said that in the event of the shares tendered by the public being less than the offer, it will approach Satyam for an issue of shares to make up the deficit.

If not enough shares are offered, Tech Mahindra will ask if Satyam can issue shares to make up the deficit.

The shares will be priced at 58 rupees each, in line with the share subscription agreement between Satyam, Tech Mahindra, and Venturbay, an investment subsidiary of Tech Mahindra.

The issue of shares through a preferential issue of fresh equity will increase the number of shares of Satyam. For the same number of shares acquired, Tech Mahindra will now get a 42.7 percent stake in Satyam, rather than the 51 percent originally planned.

Tech Mahindra has not decided whether to acquire more shares to hike its stake to 51 percent, the company spokesman said.

Tech Mahindra consolidated its control over Satyam last month, by adopting a Mahindra Satyam go-to-market brand for the company, and appointing Mahindra Group executives to the CEO, CFO, and executive vice chairman positions.

The government's six nominees to the board, who were appointed in January after the crisis broke, continue in place by government order, though they may be withdrawn by the government this week, according to sources.


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Events

Featured

Slideshows

Meet the Reseller News 30 Under 30 Tech Awards 2020 winners

Meet the Reseller News 30 Under 30 Tech Awards 2020 winners

This year’s Reseller News 30 Under 30 Tech Awards were held as an integral part of the first entirely virtual Emerging Leaders​ forum, an annual event dedicated to identifying, educating and showcasing the New Zealand technology market’s rising stars. The 30 Under 30 Tech Awards 2020 recognised the outstanding achievements and business excellence of 30 talented individuals​, across both young leaders and those just starting out. In this slideshow, Reseller News honours this year's winners and captures their thoughts about how their ideas of leadership have changed over time.​

Meet the Reseller News 30 Under 30 Tech Awards 2020 winners
Reseller News Exchange Auckland: Beyond the myths — how partners can master cloud security

Reseller News Exchange Auckland: Beyond the myths — how partners can master cloud security

This exclusive Reseller News Exchange event in Auckland explored the challenges facing the partner community on the cloud security frontier, as well as market trends, customer priorities and how the channel can capitalise on the opportunities available. In association with Arrow, Bitdefender, Exclusive Networks, Fortinet and Palo Alto Networks. Photos by Gino Demeer.

Reseller News Exchange Auckland: Beyond the myths — how partners can master cloud security
Reseller News welcomes industry figures at 2020 Hall of Fame lunch

Reseller News welcomes industry figures at 2020 Hall of Fame lunch

Reseller News welcomed 2019 inductees - Leanne Buer, Ross Jenkins and Terry Dunn - to the fourth running of the Reseller News Hall of Fame lunch, held at the French Cafe in Auckland. The inductees discussed the changing face of the IT channel ecosystem in New Zealand and what it means to be a Reseller News Hall of Fame inductee. Photos by Gino Demeer.

Reseller News welcomes industry figures at 2020 Hall of Fame lunch
Show Comments