THE Company Law Board (CLB) gave the go-ahead to Tech Mahindra to 'adopt (buy) orphan Satyam Computer Services', paying Rs 2,889 crore.
The quasi-judicial body allowed the new owner to buy a 51% stake and appoint four directors on its board. However, the six government nominees will continue on the firm's board till the CLB passes further orders.
The Pune-based firm was the highest bidder, agreeing to pay Rs 58 per share to take management control of Satyam. The company will now have to deposit the initial subscription amount of Rs 1,756 crore by April 21 for picking up a 31% stake through a preferential allotment.
It will also have to make a mandatory open offer of an additional 20% to existing shareholders at Rs 58 per share. The money has to be deposited in an escrow account.
"We are pleased with the honourable Board's decision. This takes us one step closer to our objectives. We look forward towards completing the next steps of the bid process," Tech Mahindra vice-chairman and CEO Vineet Nayyar said.
Mahindra & Mahindra vice-chairman and managing director Anand Mahindra and top officials from the firm will be in Hyderabad to deliberate on the transition including integration of employees. Satyam has 48,000 employees on its rolls.
The deal will propel Tech Mahindra into the top tier of Indian IT firms and throw a lifeline to the firm at the centre of India's biggest corporate scandal. Three months ago, Satyam's founder and chairman shocked investors saying profits had been overstated for years, putting in doubt the survival of a firm once ranked as India's fourth-largest software services exporter.
Tech Mahindra is a joint venture between automobile firm Mahindra and Mahindra and British Telecom, UK's largest telecom company. The BT group owns 31% in the mid-sized IT company.
Venturbay Consultants, a Tech Mahindra arm, will buy the controlling stake. The CLB has also dismissed the allegation made by the BK Modi promoted group on lack of transparency in the deal.
However CLB said that the buyer cannot sell the shares for three years or change the ownership of Venturbay without CLB approval during the same time. Also, Satyam's assets cannot be sold for two years after completing the public offer, without the approval of shareholders and of the Board.
The CLB order signed by its chairman S Balasubramanian also gave extra time till December 31, 2009 for the company to file returns and other documents with various regulators as the company has to re-state profits for six years. Also, the four directors nominated by Satyam would not be subjected to civil, criminal or punitive action by any central or state regulator for the company's acts prior to January 9, 2009, when the CLB allowed the government to replace the company's board with independent directors. CLB also asked the four proposed Venturbay directors to co-operate with the ongoing investigation into the scam.
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