Satyam Deal: Win-Win Situation

by UTVi Desk    Apr 13, 2009

The Indian IT industry has welcomed the Satyam-Tech Mahindra deal saying the acquisiton of Satyam (SATYAMCOMP) by Tech Mahindra (TECHM) is a win-win situation for the companies, employees and customers.

Y M Deosthalee, chief financial officer of L&T, which holds 12% stake in Satyam, said the company would hold on to its stake. "Tech Mahindra will add value to the company… we will continue to hold our stake."

Asked if the company was interested in the IT space, Deosthalee said: "Actually, we have to think over it. We want to grow over services portfolio. We will examine from time to time, and take a call. I don’t think (Satyam-Tech Mahindra) deal changes the landscape. It was an important transaction, and it was strategic for L&T Infotech."

He added that the company bid was based on certain assumptions. "I think in any acquisition or transaction, we have to make assumptions. This was a peculiar transaction, and we had to start with the current numbers. It is a call one takes on assumptions and judgements… someone assumes 10% growth and the other person looks at 15%, and comes out with numbers. We submitted what we thought was perfect."

Speaking on the bidding process, Deosthalee said: "It was a fair process… in our view, given the time frame, the board and the people did a fine job, and they were responsive to the bidders queries."

On the open offer, Deosthalee said: "For six months, we can’t sell the share. We have no intention of selling it. This will take time to create value, and we will wait for that. We can’t even participate in the open offer."

B K Modi, chairman, Spice Group, who was in the race earlier, wished the winner and said the move is good for everyone…. "They have to make to sure that the company is turned around."

Speaking on the lost opportunity, Modi said: "In business, there are a lot of opportunities, and there will be… I will look into other opportunities."

Legal expert H P Ranina said there is no possiblity for a last minute surprise. "The reason is if some bid was not up to the mark, it would have been disqualified. So, this will go through." Has L&T lost an opportunity? "They have only two options. Either hold their shares or sell them to the bidder."

Speaking about revising the offer and seeking legal help, Rainna said: "I don’t think that is possible. There has to be an end to this process. L&T asking for legal is just not done."

S Ramadorai, chief executive officer, TCS, said, the deal will take Tech Mahindra to a different scale…."The challenge would be to make sure that they grow from there. The challenge is integration and retaining the work force. Now that the decision has arrived, the outcome is good for people."

V Balakrishnan, chief financial officer, Infosys said, the scenario is a win-win for both Tech Mahindra and Satyam. "The challenge would be meet the aspirations…"

He added that the clients would be relieved with a credible player coming in… "Now, they have to make employees comfortable and make things work. Culturally, it will be easy since both are indian companies."

Girish Paranjpe, joint CEO, Wipro said, the best thing for the industry and the clients is the swift closing of the matter. "There was lot of uncertainty but the matter was closed in a transperant manner.

Speaking on clients, Paranjpe said they would be relieved that the period of uncertainty would be over. "Making the period short is the best news. Having gone through this, they can evaluate on their own but that is secondary…" 

Related Links

Tech Mahindra to Participate in Satyam Bid
Satyam Denies Merger Rumors