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Satyam Board may cap initial stake sale at 31%

27 Feb 2009 Evaluate

Fraud-hit software services provider Satyam Computer Services Ltd’s government-constituted board may offer no more than a 31% stake in an initial sale of new shares to a strategic investor, but is open to a second preferential sale. The board may want the winning bidder for the stake to buy a further 20% through a mandatory open offer to minority shareholders. It may consider another preferential offer only if the investor fails to take the stake to 51% and gain majority control after the open offer concludes. The intention is to provide an exit route to the company’s minority shareholders through the open offer.

 

A preferential offer of 31%, followed by an open offer by the winning bidder to buy 20% will meet the twin objectives of pumping in much-needed, new funds into the company and providing an exit route to the minority shareholders. In case if the minority shareholders may not tender 20% through an open offer, the shortfall would be made up through a second preferential offer.

 

Under Indian takeover laws, an open offer is mandatory once an investor buys at least 15% of a company. The Securities and Exchange Board of India has agreed to ease rules relating to the price at which an open offer must be made. Investment bankers Goldman Sachs and Avendus Capital Ltd have been given the mandate to find strategic investors.

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Peers
Company Name CMP
TCS 2473.50
Infosys 1181.50
HCL Tech. 1198.95
Wipro 200.65
Tech Mahindra 1474.05
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