Look at the Satyam bids !…helps you gauge the risk Tech Mahindra may have taken !

The 2 pm media meet by the Board of Directors of Satyam threw up some interesting facts about the Satyam Bidding Process

  • Larsen & Toubro bid was Rs 45.90/share for Satyam
  • Wilbur Ross’s bid was even lower at Rs 20/share !
  • The winner,Tech Mahindra, bid Rs 58 through it’s 100% subsidiary….the bid spread clearly indicates the wide ranging Satyam risk and valuation perspectives
  • Tech Mahindra can take over the management of Satyam immediately after Monies come in and the Company Law Board approves the bid…they do not have to wait for the Open Offer
  • Restatement of Accounts for the past Six Years will take a few more months…Both Accountant Firms retained are working towards this
  • Employees are 51000 of which 45500 are Satyam standalone,rest are contracted and associates
  • Satyam owns 450 acres of Freehold and Leasehold land in equal ratio…125 acres are over two Campus in Hyderabad City,one in IT City and the other is Satyam Technology Centre…These have been independently valued at Rs 1700 crs by three different valuers and Rs 600 Bank Loan arrangements with two Banks have been made against these two campus
  • Loan Drawn so far is Rs 300 crs,which they will repay from the bid monies
  • Larsen & Toubro Shares have a lock in of six months…so,can we assume, they cannot be tendered in the Open Offer 
  • It is upto Tech Mahindra to decide to bring in another Equity Investor or merge Satyam with itself…They cannot strip Satyam of it’s assets…This,I can tell you is,one of the provisions of the SASTA or Substantial Acquisition and Takeover Act.It prohibits asset stripping for Two Years after the acquisition or takeover 
  • If Tech Mahindra does not deposit the monies of Rs 1756 crs in the Escrow account and in the Company,in the determined ratio, within four working days…that’s by coming Monday,as tomorrow’s a Holiday,the second highest bidder will not be invited to come in…However,the Chairman of Satyam,Mr Kiran Karnik does not feels that this situation could occur.
  • As far as retaining the name ‘Satyam’,the Board has not suggested anything to the Winning Bidder…it will be their decision 
  • The mandatory offer will be at Rs 58 and the open offer process will be followed which would have to seek SEBI approval…The Open Offer would probably be inside two months…that’s by June 2009   

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