|
INDIA BUSINESS WORLD - 16th JANUARY - TO - 31st JANUARY - 2009
LARSEN & TOUBRO (L&T) TRIPLES ITS STAKE IN SATYAM COMPUTER SERVICES TO 12%
LARSEN & Toubro (L&T) has tripled its stake in Satyam Computer Services to 12%, firing a shot across the brow of potential rivals in the battle to take over the stricken software exporter and piling on the pressure on authorities to bless the transaction.
v
A spokesman for L&T, the country's largest engineering company, said the move to buy the additional stake in Satyam was aimed at reducing the average cost of acquiring Satyam shares and strengthening its position to influence the Satyam board. L&T's average cost of buying Satyam shares has fallen to around Rs 80 from Rs 157 apiece, brokers say.
“By buying 12%, L&T is now the largest single shareholder in Satyam and are therefore entitled to a board seat," said Alok Shende, principal analyst at Ascendia Consulting. The L&T spokesman said the firm would take a call on seeking a representation on the Satyam board “at an appropriate time".
Four slots remain unoccupied as the government has appointed only six directors to the Satyam board. After it sacked the Hyderabadbased company’s old board earlier this month, it announced plans to have a new 10-member body of luminaries to save the tottering company from collapsing. The board now includes banker Deepak Parekh, former CII president Tarun Das and former Nasscom chief Kiran Karnik.
Shares in Satyam, India's fifth-biggest software exporter by sales and once ranked among the country's most admired companies, have been battered and its fate has hung in balance after its founder and now jailed former chairman B Ramalinga Raju admitted he had fudged its accounts for years in a fraud estimated to be more than Rs 7000 crore.
Top L&T officials have made little secret of their desire to buy Satyam in recent weeks, and executives led by chairman AM Naik have lobbied ministers and other government officials to facilitate a deal. "This is perhaps the last opportunity for Mr Naik...to prove his mettle in the IT industry. As he is going to hang his boots in three years, he would not like to let the opportunity go," said a person familiar with the matter.
An acquisition of Satyam could catapult L&T, which already runs a fledgling software business through subsidiary L&T InfoTech, to the big league of the Indian IT industry, sealing Mr Naik’s legacy when he eventually steps down. Satyam's client base and business have attracted several others to look at acquiring it, although many potential suitors want greater clarity on its books and remain wary about the legal challenges the company is facing, most notably in the US.
One potential suitor, TechMahindra, a software company of automobile group Mahindra & Mahindra, reacted cautiously to the L&T move to raise its holding in Satyam.
|
