Saturday, March 7, 2009

Is IBM also in the race to buy Satyam?

Global IT giant IBM is learned to be leading the list of prospective buyers of beleaguered Satyam Computer Services. If the plan fructifies, IBM would become the largest IT services player in India with a combined employee strength of over 125,000 people.

According to sources close to the development, IBM officials has begun discussions with Satyam board and expressed its desire to acquire a majority stake in the company. Moreover, a team of investment bankers and lawyers from the U.S. and Europe has been brought in to assess the size of the deal and the risks associated with it. It is also believed that IBM has conducted an initial due diligence on some of Satyam's major customers.

Making easy entry for foreign players, Minister of Corporate Affairs P C Gupta had said a week ago that open bids would not be restricted to Indian players. IBM was named one of the hostile bidders for Satyam at the company's meeting in the last December. Apart from IBM, other prominent companies in the race are Larsen & Toubro (L&T), which owns 12 per cent in Satyam, and B K Modi-owned Spice group.

The government-nominated board is expected to invite bids for a 31 per cent stake in the company, but is likely to assure the successful bidder 51 per cent even if it fails to get the additional mandatory 20 per cent from the open offer.

Analysts foresee that if IBM can buy Satyam, that can give IBM the leverage to compete with Indian IT service providers as Satyam has a low-cost structure.

Agencies

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