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Satyam sale process underway; bidders face deadline

business Updated: Mar 12, 2009 15:17 IST

Reuters
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Fraud-hit Satyam Computer Services closes registrations for potential bidders on Thursday, kicking off a process to sell a majority stake in the company caught in the country's biggest corporate scandal.

Some firms are likely to put in expressions of interest, attracted by Satyam's strong client base and its large workforce, but final bids will depend on clarity on Satyam's finances and legal liabilities.

Satyam's government-appointed board is keen to bring in an investor to restore confidence among its roughly 50,000-strong staff and more than 600 customers, which include General Electric and Qantas Airways.

"We will see many companies registering their interest by the end of the deadline today, but it remains to be seen how many of them will stay the course after the due diligence," said Tejas Doshi, head of research at Bombay-based Sushil Finance.

Satyam has said it would provide shortlisted bidders access to certain business, financial and legal information.

"Unless the Satyam board makes available enough data based on which a buyer can put a value to the company, I don't think there will be many left in the final stages of bidding to take a shot in the dark," Doshi said.

Satyam has been struggling for survival since founder and Chairman Ramalinga Raju shocked investors in January, saying

Satyam's profits had been overstated for years and assets falsified.

The government intervened quickly and appointed new board members and state-run financial companies have provided funding to the beleaguered firm. Raju, the managing director and the chief financial officer quit and were later arrested.

Satyam, whose shares jumped nearly 40 per cent in the previous two sessions, eased 1.9 per cent to 47.8 rupees by 0815 GMT on Thursday. The company's market value has plunged to $630 million from $7 billion last May.

Bidders

A spokesman for the top engineering firm, Larsen & Toubro Ltd, which controls about 12 per cent of Satyam, said it would submit its interest to acquire the company.

Bidders need to register their interest by end of Thursday to buy a 51 per cent stake in Satyam. They will be asked to submit a detailed expression of interest and show availability of at least 15 billion rupees ($290 million) by March 20.

Analysts say global IT servcies companies are unlikely to join the race for Satyam Capgemini, Europe's largest computer consultancy, has no interest in buying a stake in Satyam, a spokesman said on Wednesday. Earlier, sources told Reuters IBM was unlikely to be interested in bidding.

Another potential suitor, diversified Hinduja Group, said it had not yet decided whether to submit its bid interest.

Satyam also faces class-action lawsuits from US shareholders, and a leading English daily reported on Thursday that this could cause a liability of between $440 million and $840 million, quoting Spice Group Chairman BK Modi.

Satyam's board had appointed KPMG and Deloitte in January to restate accounts. ($1=51.7 rupees)