Tech Mahindra wins bid for Satyam Computer Services

India's Tech Mahindra won the bid for Satyam Computer Services in a sale aimed at giving the scandal-hit outsourcing giant vital capital and a new beginning. The mid-level outsourcing firm will have to pay nearly $600 million (Dh2,204m) for a majority share of Satyam, which has struggled since its founder earlier this year confessed to staging India's biggest accounting fraud. Satyam said in a statement the news "signals a new stage for the company". The firm, which was India's fourth-largest outsourcer by revenues when the scandal broke, acts as back office for some of the world's biggest manufacturers, healthcare providers as well as banks. The spokeswoman for Hyderabad-based Satyam said Tech Mahindra put in the highest offer among the sealed bids opened earlier in the day by the company's government-appointed board. "Tech Mahindra has won the bidding at Rs58 ($1.16) a share," she said. The offer represents a 23-per cent premium to Satyam's last closing share price and would mean Tech Mahindra would have to pay about Rs29bn ($581.3m) for a 51-per cent stake. In January, founder B Ramalinga Raju admitted faking a billion-dollar bank balance and inflating the company's profits. Raju, his brother and seven other people, including two Price Waterhouse India auditors, are now being held on charges of conspiracy, cheating, forgery and falsification of accounts. The new board was appointed by the government after the confession. Tech Mahindra beat Indian engineering heavyweight Larsen & Toubro, which already had a 12-per cent stake in Satyam and was seen as a front-runner for Satyam. It bid Rs45.90 a share. "The selection of the highest bidder, in a fair, open and transparent process, signals a new stage for the company in its progress towards stabilisation and growth," Satyam said in a statement. The sale had taken on an urgency, with dozens of clients reported to have terminated their contracts or planning to defect to Satyam's rivals because of the uncertainty over its future. "This event ought to dispel the anxiety of all stakeholders as it re-positions the company's commitment to revival and good governance," said Satyam board Chairman Kiran Karnik. The company was "in deep trouble. We doused the fire and brought it back on course", he told a news conference. Shares of Tech Mahindra, which is based in the western city of Pune, were up Rs46.15, or 14.68 per cent, at Rs362.25 following the announcement. The firm is majority-owned by Mahindra and Mahindra, one of India's top 10 industrial houses, in partnership with British Telecommunications . Satyam shares climbed Rs3.15, or 6.68 per cent, to Rs50.30 but were still well down from their 2008 peak of Rs544. According to the sale process, Tech Mahindra will buy 31 per cent of Satyam and then make an open offer on the share market for another 20 per cent of the firm. The board, advised by investment bankers Avendus and Goldman Sachs, had said it wanted a buyer that had a viable operating plan for Satyam. Tech Mahindra has 23,000 employees, less than half Satyam's head count of 48,000. Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here .