The Securities and Exchange Board of India, which
recently eased takeover regulations,
approved a majority sale of Satyam Computer Services Ltd. (NYSE:SAY), the subject of India's greatest corporate scandal. Buying into the IT outsourcer is tricky.
On one hand you have an otherwise attractive company that had its $7 billion valuation drop by about 70%. But then there's the uncertainty about its accounts and liabilities, which came to light after chairman and founder Ramalinga Raju said the company has inflated its balance sheet for years.
Potential buyers will compete in a global bidding process. The winner will be issued 31% of fresh equity and allowed to make an open offer for another 20% of equity -- but it won't be allowed to sell shares for at least three years. India's
Spice Group Inc.; Larsen & Toubro, the nation's biggest engineering company; Hinduja Global Solutions; and BK Modi all expressed interest in buying Satyam. IBM Corp. has reportedly shown interest as well. Qualified investors are expected to have total net assets in excess of $150 million.
Although plagued by financial uncertainty, the AP notes
analysts say bidders are attracted by Satyam's strong client base (including General Electric Co. and Qantas Airways), and its large work force of about 50,000.
Satyam shares jumped about 20% on the news. -
Baz Hiralal
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