Satyam in talks to buy company in Europe

Written by Bloomberg | Updated: Mar 29 2012, 09:07am hrs
Satyam, which is being bought out by Tech Mahindra, is in talks to acquire a company in Europe to strengthen the services it provides the aerospace industry.

The company is in an advanced stage of discussions for a major purchase in aerospace, Lakshmanan Chidambaram, head of North America at Satyam, said in a phone interview from Boston on Wednesday. Satyam, 43% owned by Tech Mahindra, is scouting for acquisitions and will spend as much as $150 million, he said.

Tech Mahindra vice-chairman Vineet Nayyar said last week the buyout of Satyam will propel them into the big boys category, with R1,800 crore ($353 million) of cash. Buying a service provider to the aerospace industry will help cut dependence on telecommunications customers, who will be the biggest revenue contributor at the merged entity, according to Ankita Somani, an analyst at Angel Broking in Mumbai.

They are trying to scale up their businesses in growing verticals like manufacturing, said Somani. They want to scale up their services so they can chase contracts which the large cap information technology companies are chasing.

Larger rivals Tata Consultancy Services and Infosys are leading the hunt by Indian software companies as they turn to acquisitions to expand into Europe, currently the largest source of their revenue after the US.

Satyam, based in Hyderabad, will consider buying companies that specialise in services for industries such as retail, travel, logistics and consumer products, he said.

Satyam and Tech Mahindra are negotiating for 30 contracts in the Americas, with the orders ranging from $25 million to $200 million, Chidambaram said.

Tech Mahindra last week said it will buy Satyam in a stock deal.