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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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The Indian IT Miracle's Debacle On March 6th 2009, Satyam got SEBI’s approval for the proposed framework to initiate the open bidding process for selecting a suitor who would invest 51%strategic stake in Satyam. Satyamboard further enunciated a few terms and conditions making it necessary for the investor to have total net assets exceeding $150million, to be qualified to acquire the stake in Satyam,which however is subject to the receipt of all regulatory approvals. Setting a lock-in period of 3 years for the acquired shares of Satyam, the board also noted that the entire process would require the selected investor to acquire a 31%stake in Satyam’s share capital via subscription of newly issued equity shares...

Why the Wide Divergence in Satyam Bid Prices Thewide variation in the bid prices submitted by the three contenders for SatyamComputer Services has set off a debate on whether this could be due to the several “unknowns” with respect to Satyam (whose accounts are yet to be restated), or due to the varying priorities of the bidders themselves. The highest bid, fromTechMahindra, was for Rs 58 a share; the second highest, fromL&T, was 21 per cent lower, at Rs 45.90. The third bid, byWL Ross, was way lower at Rs 20 a share...

Tech Mahindra Logs into Satyam Computers:Any Synergies? TechMahindra was originally incorporated as a joint venture between an automobile and tractor manufacturerMahindra &Mahindra Ltd. and theUK-based British Telecommunications plc. (BT), under the name ‘Mahindra-British Telecom’ (MBT) in 1986 (Exhibit XII).Within the next 7 years, the company gradually grewand established its first overseas subsidiary,MBT International Inc., in 1993. The very next year, BVQI awarded the ISO9001 certification toMBT for its compliancewith international standards...

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An Acquired Asset or a Liability? Though Tech Mahindra was immediately ushered in as the new owner by the interim board on the basis of its bid price, themainmotive of TechMahindra in quoting INR 58 per share, nearly three times to that ofWilbur Ross which quoted INR 20 per share, was not assessed by it. It was observed that the main motive of Tech Mahindra was to diversify its revenue streams and buy scale...




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