Tech Mahindra may buy up to 70 per cent stake in Satyam

Tech Mahindra, which has completed raising funds for acquiring the 51-per cent equity in fraud-hit Satyam Computer Services, including the 31 per cent it bid for and the mandatory 20 per cent public offer, and may acquire up to 70 per cent stake in the IT company, but short of taking the firm private.

The maximum holding of Tech Mahindra in Satyam would, however, be capped at 51 per cent if it fails to acquire a minimum of 20 per cent in the public offer.

The agreement also mandates that Satyam would have to allot further shares to Tech Mahindra through a second preferential allotment if the open offer results in tendering of less than 20 per cent of equity.

Venturbay Consultants Pvt Ltd, a special purpose vehicle created by Tech Mahindra for the Satyam bid, has deposited Rs1,756 crore ($352.6 million) for the initial 31 per cent stake purchase and the funds needed for the subsequent open offer. Satyam would now make the preferential share allotment.

The open offer has to be at a minimum price of Rs58 a share, the price Tech Mahindra paid for the initial 31 per cent stake in Satyam.

Tech Mahindra by agreement has to cap its open offer at "a maximum of that percentage of shares which when aggregated with the 31 per cent acquired from the company (Satyam) in the preferential allotment and any other shares already beneficiary owned by the bidder would not exceed 70 per cent of the enhanced share capital."