Abstract

The case discusses in detail the events that happened in India-based Satyam Computers, after its Founder and Managing Director, Ramalinga Raju confessed of being responsible for accounting irregularities in the company amounting to Rs.70 billion. The confession impacted not only the employees and customers of Satyam, but the IT sector in the country as a whole. The Government of India, intervened immediately, and constituted a new board for the company, whose focus was to find a strategic investor for Satyam. The board had to carry out this task in a fair and transparent manner, as soon as possible. At the same time, it also ensured continuity of operations, and stopping exodus of clients. The board then came up with guidelines for the sale of Satyam that included competitive and open bidding process, and criteria for technical bids. The global bidding process witnessed expression of interest from several companies, and ultimately three companies remained in the fray to acquire the company. Of these, Tech Mahindra emerged the winner as the price it quoted was the highest. The case discusses in detail the bidding process, the reasons due to which several companies opted out of the process, and the selection process of the final bidder. The case also examines the benefits that Tech Mahindra expects and challenges it is likely to face after the acquisition of Satyam.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Study the concept of strategic sale of companies.
• Understand the reasons that led to the problems at Satyam.
• Examine the role played by the government constituted board.
• Analyze the bidding process and criteria for selecting the winner.
• Examine the synergies and challenges for Tech Mahindra after acquiring Satyam.

Keywords

Satyam Computer Services Limited, Tech Mahindra Limited, BT Plc, Acquisition, Strategic Sale, Strategic Investor, B. Ramalinga Raju, Accounting fraud, Government of India, Company Law Board, Securities and Exchange Board of India, L&T Infotech, WL Ross & Company, Client attrition, Global financial crisis, Maytas Properties Private Limited, Maytas Infrastructure Limited, Global competitive bidding, Expression of Interest, Transaction structure, Technical Bids, Financial Bids, Venturbay Consultants Private Limited, Deepak Parekh, Kiran Karnik, Synergies, Merger Integration