Indian IT services provider Tech Mahindra, an outsourcing group partly owned by British Telecom of the UK, has won a controlling stake in Satyam Computer Services. Satyam is India’s fourth largest outsourcing company and since January has been embroiled in one of the biggest corporate scandals in the nation’s history.
During the auction, which was conducted in a luxury hotel in Mumbai on 13 April, very little financial information was offered about the current state of Satyam, and no reassurances were given regarding the likely outcome of the class action lawsuits that have been launched by US law firms and financial institutions against the troubled company.
Tech Mahindra, in which British Telecom owns a 31% stake, put in the highest bid during the sale, which was initiated by Satyam’s government-appointed board. It acquired a 31% stake in the company, through its subsidiary Venturbay Consultants, for US$351 million.
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Tech Mahindra chairman Anand Mahindra said in a press release: “I would like to welcome the Satyam family to the Mahindra Group and thank all its stakeholders for standing by the company during this difficult period. The Mahindra Group is recognized for its resilience, tenacity and focus on customer centricity, and together with Satyam associates, we will work to quickly reinforce confidence in the company and build a better future.”
The managing director and CEO of Tech Mahindra, Vineet Nayyar, added: “We would like to reassure stakeholders that priority focus is being given to retaining critical customer-facing resources, so that the customer experience continues undisturbed. This is also a new beginning for Satyam – and for Tech Mahindra. Both companies will now have access to enhanced talent and scale to compete in the global market.”
The Company Law Board, an independent regulator, must approve the sale before placing a public tender for an additional 20% of Satyam.
Delhi-based P&A Law Offices is advising Tech Mahindra on Indian aspects of the purchase while Jones Day is acting as US legal counsel. Indian legal counsel to Satyam is being provided by Amarchand Mangaldas, while Latham & Watkins is representing the outsourcing company in the US.
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