India Approves Satyam Stake Sale to Tech Mahindra

April 16 (Bloomberg) -- India’s Company Law Board approved Satyam Computer Services Ltd.’s sale of a 31 percent stake to Tech Mahindra Ltd. for 17.6 billion rupees ($355 million).
Tech Mahindra on April 13 won the bidding for control of Satyam, the software exporter at the center of India’s biggest fraud inquiry, beating U.S. billionaire Wilbur Ross and Larsen & Toubro Ltd. with a $579 million offer. The sale needed the law panel’s approval after the government took control of the company in January in the wake of its founder Ramalinga Raju’s admission that he’d inflated assets by more than $1 billion.
The approval allows Tech Mahindra to make a mandatory open offer for a 20 percent stake from shareholders and nominate its executives to Satyam’s board. Pune-based Tech Mahindra can take charge of a business serving clients including Cisco Systems Inc. and Nestle SA and almost triple its workforce, boosting its ability to compete with larger rivals Tata Consultancy Services Ltd. and Infosys Technologies Ltd.
Tech Mahindra can nominate “not more than four of its nominees” as directors on Satyam’s board, S. Balasubramanian, the law panel’s chairman, said in the order. These nominees can function “without apprehension of being subjected to civil, criminal or punitive actions” while the fraud probe is in progress. Satyam’s six state-appointed directors will also stay on until further orders, he said.
Satyam also gets time until Dec. 31 to restate its accounts, according to the order.
Set up as a venture between BT Group and India’s largest utility-vehicle maker, Mahindra & Mahindra Ltd., in 1986, Tech Mahindra counts the British telecommunications company as its largest client and mainly serves phone companies in Europe. The software exporter had 25,429 employees at the end of December, about half of Satyam’s workforce of 48,000.
Satyam fell 4.4 percent to 45.45 rupees at 2:50 p.m. in Mumbai trading, while Tech Mahindra declined 3 percent to 357.55 rupees. The benchmark Sensitive Index lost 1.3 percent.