Mahindra Satyam offer flops; preferential allotment on cards
02 Jul 2009
Tech Mahindra's public offer to acquire an additional 20-per cent stake in Mahindra Satyam ended on Wednesday amid tepid response, which means the company will now exercise the option of increasing its stake through preferential allotment.
On the conclusion of the mandatory open offer to shareholders of Mahindra Satyam, the new owner has a little over 42 per cent stake in the Hyderabad-based company, as against the original plan of acquiring a total of 51 per cent of the equity.
Analysts said the poor response was most likely due to a spike in the share price of the fraud-hit Indian outsourcer. Shares in Mahindra Satyam, the new avatar of the scam-hit Satyam Computer Services, rose 3.7 per cent on Wednesday to Rs73, and the stock hasn't dipped below Rs70 since the launch of the open offer.
Tech Mahindra, 31 per cent-owned by Britain's BT Group, bought a 31 per cent stake in in Mahindra Satyam in April, and on 12 June launched an open offer to buy up to 20 per cent in the open market at Rs58 a share to take its stake to 51 per cent.
Tech Mahindra said in a statement to the stock exchanges the final numbers of shares tendered and accepted in the public offer would be announced on 8 July. If the offer is not fully subscribed, Tech Mahindra can opt for a second preferential issue of Satyam shares to raise its stake to not more than 51 per cent of the expanded share capital, as per the agreement hammered out with the regulators.
Tech Mahindra said in the statement the second preferential allotment of shares would also be at Rs58 a share.
Tech Mahindra now plans to raise its stake in Satyam Computer Services Ltd to about 44 per cent, according to a report. The company may buy new Satyam stock after receiving ''no significant'' acceptances from shareholders for its tender offer, chief financial officer Sonjoy Anand told Bloomberg on Wednesday. Spending the same amount on new shares would raise Tech Mahindra's stake to ''a little less than 44 per cent'' from 31 per cent, he said.