Tech Mahindra Acquires Satyam-the process as it went..!!
Tech Mahindra, a global systems integrator and business transformation
consulting firm has recently acquired a 31 percent stake in the 'fraud
hit' Satyam Computers after a long process of bidding, which ended on
13th April,2009. Finally, the three month long ordeal was broken, and
thus ended the bidding session of the beleaguered Satyam, with Tech
Mahindra emerging as the top bidder, with an offer of Rs 58 per share.
TM is to acquire the stake in an all cash deal, and also has plans to offer a 20% stake for the management control of the company as well. Presently, the board of Satyam Computers, is a government appointed one and is also a subsidiary controlled by TM LTD. as it is the highest bidder to acquire a controlling stake in the company.
The Satyam board selected Tech Mahindra through a global competitive bidding process launched by the company on 9th march, 2009, which was designed in accordance with the orders of the Company Law Board, approved by the Securities & Exchange Board of India and conducted under the supervision of Justice Bharucha.
After evaluating the financial and technical bid of each bidder, the board and Justice Bharucha ranked the bidders based on the price. The result illustrated Tech Mahindra to be the highest bidder. Furthermore, the board also deemed this company's bid to be satisfactory and in the interests of Satyam computers.
When TM was declared as the highest bidder, it entered into a share subscription agreement with the company. According to this, TM has agreed to subscribe and acquire 30,27,64,327 shares of Satyam. It has also agreed to infuse Rs 1756 crores as an initial amount into the company. TM is to deposit the initial subscription amount in accordance with the Takeover Regulations in separate escrow accounts on or before 21st April 2009.
If Tech Mahindra desires to take control of the affairs of the company simultaneously with the preferential allotment then it will be required to deposit in the escrow accounts, the total funds necessary to consummate the public offer. The preferential allotment is subject to fulfilment of certain conditions and obtaining the required regulatory approvals, including approvals from the Company Law Board and the SEBI.
In the event of Tech Mahindra failing to deposit the total acquisition Funds on or before April 21st , 2009, the next highest bidder will be considered as the highest bidder and the details will be announced by the board.
In accordance with the SEBI Takeover regulations act of 1997, Tech Mahindra will be obligated to submit a mandatory cash tender offer in order to obtain an additional minimum amount (amounting to 20 percent) of the enhanced share capital and convertible instruments. This act will be undertaken at the minimum share price of Rs. 58/- per share.
However, the closing of the public offer will be witnessing Tech Mahindra as the company that will have acquired less than 51% of the enhanced share capital pursuant to the preferential allotment and the public offer.
The option of subscribing to additional and newly issued shares will be resting with Tech Mahindra. The process of acquiring of these shares will be through the methods of preferential allotment and initial public offerings.
The subsequent preferential allotment will not be more than 51 percent of the enhanced share capital. This will be in effect after the issuance of additional shares.
As of now, even when the Satyam deal has been finalized, Satyam chairman Kiran Karnik wants to quit the board at the earliest possible moment and he also stated that he wanted the new owner to have his own style of 'running the show'.
Meanwhile, the share market was topsy turvy too, with the take over of Mahindra over Satyam. The shares of Tech Mahindra were trading 13 per cent higher at about Rs 364 levels, while the shares belonging to Satyam flared up by over 8 per cent to Rs 50.tt
TM is to acquire the stake in an all cash deal, and also has plans to offer a 20% stake for the management control of the company as well. Presently, the board of Satyam Computers, is a government appointed one and is also a subsidiary controlled by TM LTD. as it is the highest bidder to acquire a controlling stake in the company.
The Satyam board selected Tech Mahindra through a global competitive bidding process launched by the company on 9th march, 2009, which was designed in accordance with the orders of the Company Law Board, approved by the Securities & Exchange Board of India and conducted under the supervision of Justice Bharucha.
After evaluating the financial and technical bid of each bidder, the board and Justice Bharucha ranked the bidders based on the price. The result illustrated Tech Mahindra to be the highest bidder. Furthermore, the board also deemed this company's bid to be satisfactory and in the interests of Satyam computers.
When TM was declared as the highest bidder, it entered into a share subscription agreement with the company. According to this, TM has agreed to subscribe and acquire 30,27,64,327 shares of Satyam. It has also agreed to infuse Rs 1756 crores as an initial amount into the company. TM is to deposit the initial subscription amount in accordance with the Takeover Regulations in separate escrow accounts on or before 21st April 2009.
If Tech Mahindra desires to take control of the affairs of the company simultaneously with the preferential allotment then it will be required to deposit in the escrow accounts, the total funds necessary to consummate the public offer. The preferential allotment is subject to fulfilment of certain conditions and obtaining the required regulatory approvals, including approvals from the Company Law Board and the SEBI.
In the event of Tech Mahindra failing to deposit the total acquisition Funds on or before April 21st , 2009, the next highest bidder will be considered as the highest bidder and the details will be announced by the board.
In accordance with the SEBI Takeover regulations act of 1997, Tech Mahindra will be obligated to submit a mandatory cash tender offer in order to obtain an additional minimum amount (amounting to 20 percent) of the enhanced share capital and convertible instruments. This act will be undertaken at the minimum share price of Rs. 58/- per share.
However, the closing of the public offer will be witnessing Tech Mahindra as the company that will have acquired less than 51% of the enhanced share capital pursuant to the preferential allotment and the public offer.
The option of subscribing to additional and newly issued shares will be resting with Tech Mahindra. The process of acquiring of these shares will be through the methods of preferential allotment and initial public offerings.
The subsequent preferential allotment will not be more than 51 percent of the enhanced share capital. This will be in effect after the issuance of additional shares.
As of now, even when the Satyam deal has been finalized, Satyam chairman Kiran Karnik wants to quit the board at the earliest possible moment and he also stated that he wanted the new owner to have his own style of 'running the show'.
Meanwhile, the share market was topsy turvy too, with the take over of Mahindra over Satyam. The shares of Tech Mahindra were trading 13 per cent higher at about Rs 364 levels, while the shares belonging to Satyam flared up by over 8 per cent to Rs 50.tt
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