Satyam's disgraced chairman Ramalinga Raju had made an emotional pitch that the company faced a takeover threat from IBM and their likes, to avert which he wanted the board's support to diversify into other areas.
Returning from the US ahead of the December 16 meeting, wherein the company decided to go in for the Rs 8,000 crore acquisition of two firms related to his family, Raju had told the board that IBM and another company are going to take over the Indian IT firm because of its strong cash balances, a member present at the meeting said.
Raju also warned that after the takeover of Satyam, pink slips could be issued by the acquirer to enhance profits, the member said on the condition of anonymity.
To avoid this, Raju urged the members, in an informal pitch before the meeting commenced, to take what is known in the corporate world as a 'poison pill'. His suggestion was that Satyam should enter sectors where IBM and their likes would have no interest, to deter hostile takeovers.
Subsequently, the board was given presentations on Maytas Infra and Maytas Properties with the valuation, an issue on which some members wanted more clarity and adhere to certain basic parameters before going ahead with the deal though agreeing for it in principle.
According to the member, 75 per cent of the funding for the Maytas deal would have come from internal accruals and the remaining from borrowings.
He said the company's auditors had told him that they themselves had physically verified from the banks the deposits in the company's accounts. There was Rs 3,319 crore in about nine banks, he added.
After the deal failed to go through, Raju had told the board while announcing his resignation that "as the promoters held a small percentage of equity, the concern was that poor performance would result in a takeover thereby exposing the gap (between real and fictitious assets).
"It was like riding a tiger not knowing how to get off without being eaten."