The Hindu : Business : CLB nod for Tech Mahindra to acquire Satyam

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CLB nod for Tech Mahindra to acquire Satyam

Special Correspondent

Government nominees will continue till further orders

3-year lock-in for shares bought by Venturbay
Time extended to declare quarterly results

NEW DELHI: The Company Law Board (CLB) on Thursday approved Tech Mahindra’s bid price of Rs. 58-a-share to acquire the scam-tainted Satyam Computer Services and nurse the Hyderabad-based IT major back to health.

Briefing the media here on the developments, CLB Chairman S. Balasubramanian said: “Having considered myself that the board of directors [of Satyam] has selected a technically and financially competent/qualified strategic investor Venturbay (subsidiary of Tech Mahindra) to adopt and nurture the ailing Satyam, I accept the recommendations.”

The CLB also permitted Tech Mahindra to appoint four directors on the board of Satyam after acquiring 31 per cent of its equity and putting money towards 20 per cent of the public offer in an escrow account. Mr. Balasubramanian said the government nominees appointed on the Satyam board “would continue till further orders. The government need not appoint any more directors on the board.”

Dismissing apprehensions expressed in certain quarters over lack of transparency in the bidding process for selection of Tech Mahindra as the strategic investor, the CLB chief said: “I have also perused all the documents connected with the bid process... Justice Bharucha, a former Chief Justice of India who has seen the process of selection of strategic investor, has given in writing that the process of selection was fair, transparent and open as required.”

In his order, the CLB Chairman described the takeover transaction as ‘Adoption of orphan Satyam’ or ‘Orphan Satyam adopted’ and directed Venturbay Consultants Pvt. Ltd. to deposit Rs. 1,756 crore in an escrow account by April 21 for acquiring 31 per cent preferential shares. “On deposit of Rs. 1,756 crore, the board of directors [of Satyam] is authorised to issue and allot 30.27 crore equity shares of Rs. 2 each at a premium of Rs. 56 per share to Venturbay,” the order said. The CLB order stipulated that there would be a lock-in period of three years for the Satyam shares being purchased by Venturbay. This would also apply on the 20 per cent shares to be acquired through the open offer. Besides, there would also be no change in the control of Venturbay for the next three years from the date of preferential allotment. As for the declaration of quarterly results and filing of various statutory returns, the CLB admitted Satyam’s plea and extended the time limit for this purpose to December 2009. Alongside, the CLB also granted immunity to the four directors to be appointed by Tech Mahindra on Satyam’s board from any civil or criminal actions by the government authorities from any acts done by earlier management held by its erstwhile chairman and founder B. Ramalinga Raju.

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