tech mahindra satyam decide merger
Last Updated : GMT 20:41:34
Arab Today, arab today
Arab Today, arab today

Tech Mahindra, Satyam decide merger

Arab Today, arab today

Arab Today, arab today Tech Mahindra, Satyam decide merger

Mumbai - Arabstoday

India’s Tech Mahindra will buy the remaining stake in Mahindra Satyam in a stock deal valued at about $1 billion, becoming India’s fifth-largest software exporter by revenue and bulking it up to compete with bigger outsourcers. Suddenly, with the merger of the two companies, we will have revenue which is little shy of $3 billion. This will bring us into the category of big boys,” said Vineet Nayyar, managing director of Tech Mahindra. The merger will result in a company with combined revenue of about $2.4 billion and more than 350 clients across different geographies and industrial sectors, the companies said on Wednesday after their boards approved the deal. The move ends a tumultuous journey for Satyam, which came to the brink of collapse after its founder Ramalinga Raju said in January 2009 that profits had been overstated and assets falsified, in the country’s biggest accounting fraud. Satyam, which saw its share price plunge and many of its clients and staff exit after the revelation of the fraud, was sold in April 2009 to Tech Mahindra, a unit of Mahindra & Mahindra, and was later renamed Mahindra Satyam. on Wednesday’s deal will fully integrate the companies, a move investors have awaited ever since Tech Mahindra stepped in to rescue Satyam and bought a stake of about 43 per cent. “This merger gives them more power,” said Phani Sekhar, a fund manager with Angel Broking, which holds Tech Mahindra shares, adding that the tie-up would allow the former Satyam side of the company to compete for more business. “There might have been many bids that Satyam couldn’t qualify for because of its financials,” he said. The deal gives shareholders one Tech Mahindra stock for every 8.5 shares of Satyam, the companies said in a statement. The share swap ratio values the deal at 51.5 billion rupees ($1 billion), based on Tuesday’s closing price of Tech Mahindra. The deal pegs the market value of Mahindra Satyam, based in the southern Indian city of Hyderabad, at 89.8 billion rupees, roughly 3 per cent higher than its Tuesday market value. Shares in Tech Mahindra, worth $1.6 billion, were trading up 6.3 per cent at 689.50 rupees by 0918 GMT, while Satyam was up 6.1 per cent at 78.65 rupees. The benchmark Mumbai index was trading 1.6 per cent higher. The deal will be formally closed in six to nine months. The combined company will have more than 75,000 staff globally. Tech Mahindra’s founder, the Mahindra Group, held a stake of 48 per cent in the Indian technology company and Britain’s BT Group Plc owned 23 per cent at the end of December.

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