Satyam promoters ousted?

29 December 2008

Satyam Computer Services Ltd  has announced that the meeting of its board of directors due to have been held today has been rescheduled to 10 January, 2009, in order to allow the board to consider additional options.

''Satyam's board of directors recognises the serious nature of certain questions raised by the events of the last two weeks,'' said B. Ramalinga Raju, chairman and founder of Satyam in a statement on its website.  ''In order to ensure that these questions are properly addressed, and that the interests of stakeholders are fully and carefully considered, Satyam has decided to broaden the scope of its deliberations beyond a possible buy-back of its stock.''

Additional possible actions include:

• Measures to strengthen Satyam's governance structure, including increasing the size and altering the composition of the board.
• Conducting a review of the company's strategic options to enhance shareholder value.  The company has engaged DSP Merrill Lynch to assist in this review.
• Addressing issues arising from a possible dilution of the promoter's stake in the company.

The board is expected to make recommendations on these matters at the January 10 meeting

Directors up in arms
Following heavy criticism from the shareholders over its aborted attempt to acquire businesses promoted by Ramalinga Raju's sons at a higher than justifiable price, (See: Shareholder revolt forces Satyam to dump Maytas bid), it seems the independent directors on the board of Satyam have also revolted against the promoters. 

On 16 December, Satyam announced plans to acquire Matyas Property and take a controlling stake in Matyas Infrastructure -- two companies in which Satyam's founders hold significant stakes -- valuing the deal at $1.6 billion. However, Satyam backed down from those plans the following day, citing "feedback received from the investor community." 

An independent director, IT venture financier and inventor of Intel's Pentium chip Vinod Dham, has said that he would seek a change of management in the Satyam board.