Mahindra Satyam’s merger hits roadblock as founder opposes the deal

Mahindra Satyam’s founder B Ramalinga Raju, brain-box behind multi-crore rupees accounting scam in Satyam Computer along with this family is at loggerheads over proposed merger of Satyam Computer Services with Tech Mahindra, which has recently been approved by the shareholders in the extraordinary general meeting (EGM) held on June 08, 2012. Thirty-five entities set up by Satyam's founder along with family alleging in appropriation of accounts have claimed charges worth Rs 1,230 crore against the company.

In January 2009, Satyam founder Chairman B Ramalinga Raju had admitted to the accounting fraud at the IT firm, which was termed as India's own Enron scam. However, soon after that government stepped in for setting up a new board, following which Tech Mahindra bought 46 per cent stake in Satyam through a formal public auction process.

As per the merger deal, both the companies’ boards had proposed a swap ratio of 2:17. This means for every 17 shares held in Mahindra Satyam, shareholders will get two shares in Tech Mahindra. Following the merger, the merged entity will be the India’s fifth largest software company with annual revenue of about $2.4 billion.