End-game nears for Satyam, buyers wary

Font Size

Print

Feedback

Email

Discuss

Related Articles

CBI files second chargesheet in the Satyam scamSpice to move CLB on Satyam sale

Bangalore: Fraud-hit Satyam Computer Services' search for a white knight could end on Monday, but bidders face an uphill task to put a price tag on the company due to uncertainty about its finances and liabilities.

The government-appointed board meets on Monday to receive bids from suitors. On the same day, it could announce a buyer of a 51 per cent stake in the outsourcing company that had to scramble to raise funding to meet short-term needs this year.

Three months ago, Satyam's founder and chairman shocked investors by saying profits had been overstated for years, and putting in doubt the survival of the company once ranked as India's fourth largest outsourcing firm.

The government quickly stepped in and sacked the board as it sought to limit damage from India's biggest corporate scandal.

Satyam's board met in Mumbai on Thursday, in a move analysts said could be to finalise the procedures for Monday. Chairman Kiran Karnik said the due diligence by suitors of Satyam was still going on.

Indian engineering conglomerate Larsen & Toubro, which has a small software services unit, mid-sized outsourcer Tech Mahindra and US private equity firm WL Ross & Co are among the suitors.

Larsen & Toubro, which has built up a stake of about 12 per cent in Satyam, is seen by many analysts as a front-runner.

"For now, our advice could be skewed to a price lower than the current market price, but at the end of the day we want to win. So there can be some room left to go higher," said an investment banker, who did not want to be named as he was not authorised to speak to the media.

New York-listed Satyam's market value has plunged to around $600 million from $7 billion in May. The stock ended at 47.15 rupees (90 US cents) on Thursday, down more than 90 per cent from its last year's high of 544 rupees.

Analysts said Satyam looks attractive due to its long list of marquee clients and due to the plunge in market value.

However, they are unsure how to value the company due to uncertainty about its accounts and legal liabilities arising from the lawsuits filed in the United States by its shareholders.

NO INTENSIVE BIDDING

Tarun Sisodia, head of research at Anand Rathi Financial Services in Mumbai, did not expect bids to top 60 rupees a share.