INDIA BUSINESS WORLD - APRIL 2007
The Month that was ...

SATYAM SCOUTING FOR $50M BUYOUT

SATYAM Computer Services, the fourth largest software company in the country, is scouting for up to $40-50 million acquisition in the IT consulting and telecom space in the US and Europe. These could be in the form of niche small buyouts with a 'string of pearls' acquisition strategy instead of a transformational merger and acquisition that involves large buyouts. Satyam, which is sitting on cash reserves of Rs 3,500 crore, is looking for profitable companies. Last year, it had announced the acquisition of the UK-based-specialized business and systems consulting firm, Citisoft, in April 2005, in a deal involving guaranteed payment of $23.2 million and an additional performance-based payment of up to $15.5 million. It then went on to acquire Singapore-based Knowledge Dynamics, a high-end consulting solutions provider in Business Intelligence, in an all-cash transaction involving a consideration of $3.3 million and additional $2.2 million as earn out payments based on certain set revenue and profitability targets.

Meanwhile, the company is eyeing 10 large contracts of over $50 million each with a 9-12 month gestation period. The company had clinched four large deals of over $100 million last year. Satyam had won a contract from the North American division of Nissan Motor to maintain, support and enhance the application software portfolio. The services to be provided by Satyam covered business functions such as product development, sales and marketing across multiple manufacturing units and locations.

Satyam also clinched sub-contracts for a large order from General Motors from principal vendors HP and Cap Gemini. These orders were worth up to $150 million over a five-year period. The company also bagged a contract from Qantas Airways worth $55 million.