Satyam sold: Tech Mahindra highest bidder

Satyam Computer Services, which had been rattled by accounting fraud, has been sold to a unit controlled by Tech Mahindra, an Indian outsourcing firm. 

Satyam had put itself up for auction a few weeks ago. The company installed new management following at $1 billion accounting fraud. Venturebay Consultants, a subsidiary of Tech Mahindra, will pay $352 million for new shares representing a 31 percent stake in Satyam. From there Satyam will make a public offer to buy another 20 percent of shares to reach a 51 percent controlling stake.

In a statement, Satyam chairman Karin Karnik said:

On behalf of all Satyamites and their families, we congratulate Tech Mahindra on being the highest bidder. The selection of the highest bidder, in a fair, open and transparent process, signals a new stage for the Company in its progress towards stabilization and growth. We hope this will infuse greater confidence and comfort amongst customers, who continue to be happy with Satyam's excellent service delivery. This event ought to dispel the anxiety of all stakeholders as it re-positions the Company's commitment to revival and good governance.

Satyam's next big challenge is keeping its customers in the fold. For sure, Satyam is more stable today. According to the auction orders, which were overseen by an India judge and that country's equivalent of the Securities and Exchange Commission, Tech Mahindra was chosen because it met the following requirements:

• Good corporate governance;
• Social responsibility;
• Experience managing an IT services firm;
• A track record managing distressed operations;
• And a profitable strategic plan. 

Satyam said that no bid was within at least 90 percent of Tech Mahindra's bid. Tech Mahindra, which is controlled by utility vehicle giant Mahindra & Mahindra, now becomes India's fourth largest IT firm. 

Also see Bloomberg's report on the sale.