L&T, Tech Mahindra lead race for Satyam

As expected, Larsen & Toubro (L&T), Tech Mahindra and Spice group submitted their registrations as potential bidders for the acquisition of a majority stake in scam-hit Satyam Computer Services Ltd. But, the Hinduja group, which was expected to be among the potential suitors, decided against bidding. Also, Capgemini, Europe's largest computer consultancy, said it has no interest in buying a stake in Satyam. Hewlett-Packard and Computer Sciences Corp. (CSC) are likely to have submitted a bid as well. Accenture and IBM too have reportedly not submitted an Expression of Interest (EOI).

Bidders were asked to register their interest by the end of March 12 to buy a 51% stake in Satyam. They will be asked to submit a detailed EOI and show availability of at least Rs15bn (US$290mn) by March 20. While potential suitors are expected to be attracted by Satyam's strong clientele and its large workforce, final bids will hinge a great deal on clarity on the company's finances and legal liabilities arising out of class-action lawsuits in the US. Satyam's board had appointed KPMG and Deloitte in January to restate accounts.

The Hyderabad-based IT major has been struggling for survival since founder and chairman B. Ramalinga Raju made a shocking confession in January, saying that he had manipulated Satyam's books of accounts for several years. The Government quickly moved to sack its Board and has appointed its own nominees on the Satyam board. Raju, the Managing Director and the chief financial officer have been arrested and are currently in jail.

Satyam announced that the process of registration of bidders has received adequate response from Indian and international bidders, including private equity (PE) firms. At its meeting on Friday, Satyam’s Board announced that it has taken steps to release the Request for Proposals (RFP) to all registered bidders. The Board has requested the former Chief Justice of India, S.P. Bharucha, to oversee and guide the Board throughout the selection process and he has kindly agreed. The Board met with Bharucha on March 11, in Mumbai and discussed the proposed process for the induction of a strategic investor.