Fremont-based iGATE has decided not to go ahead with the bidding process for acquiring 51% stake in India's scam-tainted Satyam Computer Services (SATYAMCOMP), based on further analysis.
Talking to CXOtoday, Phaneesh Murthy, CEO of iGATE, said, "While there is no one particular reason, it's the totality of concerns like sliding revenues, unknown margins and large liabilities that made us pull out of the race."
Murthy said, "We know that there are customer exits happening at Satyam. While the value erosion and the extent of liabilities were a concern, it was the totality of concerns that influenced our decision."
The company had earlier announced its participation in the bidding process last week, competing against some of the large Indian investors.
However, our PE fund partner had no role or influence in our decision to pull out. We had prepared our own model of financials and in that model it was difficult to get a reasonable return for any investor, said Murthy.
Satyam has been struggling for survival since January 7, when its founder and former chairman, B. Ramalinga Raju, confessed to filling the company's balance sheets with $1 billion in fictitious assets and nonexistent cash.
March 20 was the deadline set by the government-appointed Satyam Board for bidders to respond to the request for proposals the IT firm had sent out on March 13.
Sources indicate that potential bidders are concerned about the lack of clarity about the financial status of Satyam, as well as the implications of the class action suits and other legal troubles that the company is facing.
CXOtoday
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