The long-anticipated merger between Mahindra Satyam and its parent company Tech Mahindra may finally be sealed after business heads from both companies said they would meet on Wednesday to finalize a decision.
The Wall Street Journal reported Tuesday that the two Indian IT service providers filed separate statements to the Bombay Stock Exchange stating that their respective boards would meet to consider a merger that would create a company with a market value of nearly US$3.4 billion.
They would also consider the amalgamation of their wholly-owned units Venturbay Consultants, C&S System Technologies, CanvasM Technologies, and Mahindra Logisoft Business Solutions, the report added.
It noted that Mahindra Satyam and Tech Mahindra are both part of the Mahindra Group conglomerate, and their merger would enable the consolidated organization to offer software services across sectors including financial services, manufacturing, retail and telecommunications.
A merger between the two had always been on the cards since the acquisition, but it was put on hold due to investigations by various regulatory authorities, Mahindra Satyam executive Hari Thalaphalli told ZDNet Asia in an interview last year. He also said the merger will likely be finalized by mid-2012.
Together, the two companies would make up India's fifth largest IT services provider and be able to close in on rival HCL Technologies, the country's fourth largest outsourcing player with a revenue of almost US$3.6 billion, the Wall Street Journal pointed out.
Both companies were also scheduled to make a joint announcement at Mahindra & Mahindra's headquarters in Mumbai, according to another report Tuesday by The Hindustan Times.
The report also noted that it would be the first press conference hosted by the two organizations since Tech Mahindra acquired Satyam in 2009. The latter had been rocked by an accounting scandal after its founder Ramalinga Raju confessed to corporate fraud. In the same year, Satyam was renamed Mahindra Satyam.
According to The Times of India, a source close to the development said there was a "strong possibility" the name Satyam would be dropped in the merged entity, given the huge baggage of negativity surrounding the company's history. However, Vineet Nayyar, chairman of Mahindra Satyam and vice-chairman of Tech Mahindra, said the final decision will only take place after the merger and an independent agency will be appointed to decide on the company name.