Satyam board confident of getting good price

11 April 2009

With the government-appointed board of Satyam Computer Services Ltd having reiterated that the final bids for the scam-shattered company would be evaluated an announced early on Monday, employees, customers and lenders are keenly watching the outcome.

With little time left, the Satyam board has reportedly provided more information about the financial state of the company to select potential bidders. However, other bidders still complain that they are in the dark about the liabilities, both financial and legal, of the company.

Several prospective bidders, including the Hinduja group and US based outsourcing major iGATE, the B K Modi-owned Spice group, and computer giant IBM have backed out citing lack of clarity and transparency in the entire auction process, particularly on details of the firm's liabilities. The IT firm has not reported its earnings since October last year.

Thus the bidding seems to have become a three-horse race, with Larsen & Toubro and Tech Mahindra the front runners. L&T already owns a 12 per cent stake in the company, and thus has the most incentive. Reports suggest US-based Cognizant Technology Solutions has teamed up with private equity firm Wilbur L Ross & Co to make a bid.

Both Cognizant and W L Ross, run by billionaire US investor Wilbur Ross, who made a fortune snapping up distressed firms and turning them around, had completed the due diligence for Satyam independently. Ross's name has been linked to more than one bidder and there has even been talk of his company teaming up with the eventual winner.

Many believe that the valuation of Satyam could take a beating, as only a few bidders remain in the fray, (See: Satyam race: Experts' take on the endgame' a CNBC-TV 18 interview carried under arrangement with domain-b). The board has not stipulated a minimum floor price, as capital market regulator Securities and Exchange Board of India has waived this requirement. However, The Economic Times quoted an unnamed source as saying that the board has an informal floor price in mind, and is confident of getting this price.