Strategic Sale of Satyam Computers
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Case Code: BSTR337 Case Length: 20 Pages Period: 2008-2009 Pub Date: 2009 Teaching Note: Not Available |
Price: Rs.300 Organization: Satyam Computer Services Limited, Tech Mahindra Limited Industry: Information Technology, Software Services Countries: US Themes: Mergers and Acquisitions |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
The Government Steps In
After Raju's confession and resignation, Ram Mynampati (Mynampati), President and Whole-time Director, was appointed as the interim CEO of Satyam. On January 09, 2009, Raju was arrested and the Indian government dissolved the board of the company. The CLB allowed the government to take over the management and control of Satyam...
The Bidders
In the first round, around 60 companies announced their interest in acquiring Satyam. Prominent among them were L&T, the Spice Group, Hinduja Group's HTMT Global Solutions, iGate Technologies, Tech Mahindra, IBM, HP, KKR Private Equity Investors, and Cognizant. In a press release dated March 09, 2009, Satyam asked all the interested parties to register their interest by participating in a competitive bidding process...
Tech Mahindra is the Winner
On April 13, 2009, the board of Satyam selected Venturbay Consultants Private Limited, a subsidiary of Tech Mahindra, as the highest bidder for the company. Tech Mahindra valued Satyam at Rs. 58 per share amounting to Rs. 56.65 billion...
The Synergies
According to industry experts, the deal was expected to make Tech Mahindra one of the top tier companies in the Indian IT industry. Satyam was Mahindra & Mahindra's largest acquisition. It catapulted Tech Mahindra from the seventh position to the fourth in the Indian IT industry...
The Challenges
Some analysts, however, pointed out that the Satyam deal could pose several challenges for Tech Mahindra. They were of the view that Tech Mahindra was taking a big risk as the extent of fraud committed by Raju was not yet clear and Satyam was also facing legal suits...
Exhibits
Exhibit I: Satyam Ten Years at A Glance
Exhibit II: Satyam Computers - Stock Price Chart (May 2008 - May 2009)
Exhibit III: How Satyam Inflated Profits?
Exhibit IV: Takeover Guidelines in India
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