Satyam Computers' Corporate Governance Fiasco (F): Tech Mahindra Logs into Satyam



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Code : GOV0040

Year :
2009

Industry : Business Law, Governance and Ethics

Region : India

Teaching Note: Available

Structured Assignment : Available

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Abstract:
Sixth in the series of case studies on corporate governance fiasco at Satyam Computer Services Limited (Satyam), this case study primarily deals with the bidding process to sell 51% stake of Satyam. This case study helps in understanding the factors leading to Satyam’s corporate governance fiasco and the series of events that resulted in selling off Satyam. The case also helps in analysing the potential synergies between Satyam and Tech Mahindra, the winner of the bid. Further this case also helps in assessing the challenges that Tech Mahindra would face in realising the expected benefits of the acquisition.

The government-appointed board, on taking over the charge at Satyam, it called for a six-stage bidding process to transfer the ownership of the company. Three suitors qualified for the final stage of the bidding process, of which Tech Mahindra won the deal with an offer of INR 58 per share, compared to INR 45.90 and INR 20 of L&T and Wilbur Ross respectively. Certain sections of the media stated that Tech Mahindra has overvalued Satyam. However, the management of Tech Mahindra maintained that Satyam was worth its bid. Surely, Tech Mahindra has lot of benefits from Satyam. For starters, Satyam will get Tech Mahindra closer to Fortune 500 clients, will help in diversification of its IT business, will make it one of the big four IT companies of India and multiply its revenue by manifold. But having the potential synergies and realising the same are two different parts of the equation, but are mutually inclusive.

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Pedagogical Objectives:

  • To have a holistic view of factors leading to Satyam Computers’ corporate governance fiasco and the tumultuous events that put Satyam Computers on the block
  • To assess and analyse the positive synergies between Tech Mahindra and Satyam Computers and to assess the broader question of why does it make sense for Tech Mahindra to acquire the bruised and beleaguered Satyam Computers
  • To assess all the challenges that Tech Mahindra would face in yielding the expected benefits of the acquisition.

    Keywords :Satyam Computer Services; Corporate Governance; Satyam – Maytas Deal; Role of Independent Directors; Shareholder Activism; Corporate Frauds in India; Ramalinga Raju; Executive and Non-executive directors; Government Intervention; Tech Mahindra and Satyam Deal; Mahindra Satyam; Anand Mahindra; Mergers and Acquisitions

    Contents :
    » The Indian IT Miracle's Debacle
    » Why the Wide Divergence in Satyam Bid Prices
    » Tech Mahindra Logs into Satyam Computers:Any Synergies?
    » An Acquired Asset or a Liability?


    Case Introduction >>




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