Bowing to pressure from shareholders, Satyam Computer Services Limited on Wednesday called off the deal to acquire Maytas Properties and take 51 per cent stake in Maytas Infra for $1.5 billion.
India's fourth largest software services provider said it reversed the decision in deference to the wishes of investors. The management said they were surprised by the market reaction.
The company in a statement said it has decided not to go ahead with the deal in the light of feedback received from the investor community.
"We have been surprised by market reaction to this decision even though we were quite positive about the merits of the acquisition. However, in deference to the views expressed by many investors, we have decided to call off these acquisitions," said Satyam chairman B Ramalinga Raju.
The company had on Tuesday announced that it was acquiring Maytas Properties for $1.3 billion (Rs.62.28 billion) and taking 51 percent stake in Maytas Infra for $.0.3 billion (Rs.14.37 billion).
Both the firms were promoted by family members of Ramalinga Raju.
The market had reacted strongly to the deal. Satyam's American Depository Receipts (ADR), listed on the New York Stock Exchange (NYSE), fell by over 50 per cent from $12.50 to $5.70 on Tuesday. The company reportedly lost over $2 billion in 60 minutes.
The deal dealt a blow to Satyam's 210,000 shareholders, as a majority of them felt that the deal was unethical and aimed to bail out firms owned by Ramalinga Raju's sons.
They were not convinced by his argument that the acquisition would help Satyam diversify its business and tap the growing opportunities in infrastructure and real estate sectors.