Potential buyers await new rules to assess Satyam worth

04 February 2009

Potential bidders for the scam-hit Satyam Computer are waiting for greater clarity on changes to takeover rules even as Sebi proceeds with investigations following the supreme court clearing the way to quiz Raju brothers.

One of the main attractions for bidders in Satyam is the company's strong client base, but analysts point to several deterrents, including legal liabilities and clarity on accounts.

Meanwhile, the market regulator has said that it would rather change rules pertaining to mandatory open offers rather than make a one-off exception of Satyam. The regulator, however, did not give a time frame for the change.

Analysts say that  the changes in the open offer rule will determine how the acquisition of the company will be viewed by potential bidders. If the norms are not very favourable and makes the acquisition cost high, the buyer interest will fall, they add.

As per current rules a buyer of a 15 per cent stake in an Indian can make an open offer for another 20 per cent at a price not lower than the average of the previous six months.

This presents a hurdle with potential buyers as Satyam's stock fell sharply, first following a mid-December planned deal for takeover of related companies and later after Ramalinga Raju quit as chairman in January, disclosing overstatement of profits for years.