The scam-beleaguered Satyam Computer Services said on Friday that it would soon invite bids from suitors across the world for a controlling 51 per cent stake in the company, now that the Securities and Exchange Board of India has clarified the bidding norms.
"The bidding process will begin shortly," Satyam's government-appointed director Deepak Parekh (who also heads the Housing Development and Finance Corporation) told reporters after meeting corporate affairs minister P C Gupta in New Delhi.
Parekh had called on Gupta along with Satyam chairman Kiran Karnik and board member Tarun Das. Gupta reportedly told them that a retired Supreme Court judge would oversee the bidding process in order to ensure transparency.
Satyam has been accorded a special status, and existing open offer rules have been relaxed to attract bidders. It is expected that an issue of preferential shares would be followed by an open offer of the company to the highest bidder.
The preferential issue is likely to be for a 31 per cent stake and the shares will be issued at the highest bid price. An open offer at the issue price would follow; and it would have to be for a 20 per cent stake. Full subscription will thus ensure a majority control.
Besides, in a departure from normal practice, the Satyam sell-off proposal will not be reviewed by the usual takeover panel, but vetted and cleared by the department of takeovers at SEBI. This would help fast-track clearance of proposals.
The auction for the Satyam stake will be global, but potential buyers would need to have assets of at least $150 million. The buyer then would not be able to sell its stake for at least three years, Satyam said in a statement.
Satyam had been one the biggest players in the booming Indian IT software market, supplying back-office services to firms from around the world. However, after the disclosure of its fraudulent practices, the government superseded the company's board. Its founder Ramalinga Raju and others are in jail awaiting trial.
Shares in Satyam, which had been eroded by 80 per cent after the disclosure of the scam, jumped 18 per cent on Friday after the company got approval to sell a majority holding.
Bidders await details
However, potential bidders are chary of participating till they get further information. C P Gurnani, chief executive of Tech Mahindra, considered a major potential bidder, told CNBC-TV18 in an interview that clearly stated that his company would not participate in the Satyam bidding process without complete information as to its financial situation.
He considered the announcement as positive, as it provides a level playing ground for all likely bidders. But asked if he would bid if the auction took place immediately based on the new rules, he answered that ''With incomplete information we are not a bidder.''
Larsen and Tourbo, the engineering giant that is the largest single shareholder in Satyam, has taken a similar line, saying it would wait for details of the bidding process and available financial figures before taking any decision on bidding.
"The statement of Satyam today is elementary. We will have to study the documents and then decide what to do next. We have to know how they (Satyam) are going to evaluate the bidder ... one just cannot go by the lowest price, one will have to see what is the benefit in it for shareholders,'' L&T chairman A M Naik told PTI.
L&T recently hiked its holding in Satyam to 12 per cent by acquiring close to eight per cent stake in the open market.
Meanwhile IBM, earlier reported as being a front-runner, is unlikely to bid for Satyam as the advantage of expanding in India is outweighed by the legal and financial risks related to Satyam's accounting scandal, according to Reuters.
Quoting unnamed sources, the wire agency said that IBM had not flown a team to India and was unlikely to be interested in bidding for Satyam.