L&T likely to sell remaining stake in Satyam soon

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Mumbai: Larsen & Toubro (L&T), which sold a third of its shares (about 2.72 crore) or 2.23% of its total stake in Mahindra Satyam (erstwhile Satyam Computer Services) on Friday, is expected to sell the rest of the stake in soon to fund acquistions. The total stake sale of 8.13 crore shares or 6.90% is expected to fetch L&T more than Rs 900 crore at an average share price of more than Rs 100 per share. As on March 31, 2009 L&T had cash and bank balances of Rs 775.29 crore in its books. The cumulative cash is expected to put L&T in a better position to look at growing via the inorganic route. The company has been in the news lately owing to its interest to acquire Patni Computer Services.

L&T generated about Rs 313 crore by selling each share at Rs 114.90, a premium of 42% from the Rs 81 average price at which it had bought the stake. The stake purchase had blocked almost Rs 658 crore of L&T as these shares was under the lock-in period. The total stake sale is expected to fetch L&T a profit of about Rs 250-300 crore.

At the same time, L&T has been looking out for potential acquisitions to grow its IT services unit L&T Infotech into a larger firm. Media reports have indicated that L&T has been quite keen on buying stake in Patni after its attempt to buy 31% stake in scam-hit Satyam failed. “The move by L&T is directly being linked to its acquisition plans which they have been talking for quite some time now. There was no point in keeping such a large amount blocked when they can actually use it up to fund acquisitions,” says a equity research analyst based in Mumbai. Another equity analyst says that if L&T is looking at Patni, it is going to be a expensive acquisition. “If L&T wants to acquire substantial stake in Patni, it has to buy 48% held by the Patni brothers and then go for a open offer for the next 20%. Besides this, it will also have to buy almost 18% stake held by General Atlantic or there could be a conflict of interest if it is bought by a third party,” he adds.