Satyam Gets SEBI Nod To Sell 51 Per Cent Stake

Satyam Computer Services has finally got approval from the Securities and Exchange Board of India (SEBI) to facilitate a global competitive bidding process, enabling it to sell 51 per cent stake in the company to a strategic investor. According to media reports, IBM has begun discussions with Satyam's government-nominated board and has expressed desire to acquire a majority stake in the company. IBM is understood to be the front-runner to acquire Satyam, a business daily says.
The selected investor will be issued equity shares representing 31 per cent of the company's share capital and upon a successful closing of the subscription, the investor will be required to make a mandatory minimum public open offer to purchase a minimum of 20 per cent of the company's share capital. The open offer will be made at the same share price as the price paid by the investor for the subscription.

If upon the closing of the open offer, the investor would have acquired less than 51 per cent of the share capital of the company through the subscription and the open offer, the investor would have the right to subscribe to additional newly issued equity shares, such that the shares acquired by the investor through the three related steps, the initial subscription, open offer and the subsequent subscription (if any) will result in the investor acquiring 51 per cent of the share capital of the company. The subsequent subscription, if any, will not result in requiring a further open offer.

In accordance with applicable Indian law, the investor will not be permitted to sell any equity shares acquired for a period of three years from the date of the acquisition, although the investor would be able to subscribe for additional equity shares.

Satyam expects to invite expressions of interest from qualified investors shortly in a global competitive bidding process. Qualified investors are expected to have total net assets in excess of $150 million.

SEBI has also eased the pricing norms for the preferential offer. Global IT firms including IBM can bid for Satyam now. Engineering group Larsen & Toubro, Mahindra and Mahindra Group firm Tech Mahindra and B. K. Modi-owned Spice Group are amongst the suitors who have declared their interest in Satyam, after its disgraced founder B. Ramalinga Raju confessed to perpetrating a Rs 7,000 crore financial fraud, reports The Economic Times.