IBM may scoop up the fraud-hit Satyam

By Harichandan Arakali | March 7, 2009, Saturday |

Print Edition

SATYAM Computer Services Ltd, the software company at the center of India's biggest corporate fraud inquiry, won approval to sell a majority stake in itself to restore investor confidence and stem client defections.

The Securities and Exchange Board of India approved plans for Satyam to sell 51 percent of the company, the Hyderabad-based software-services provider said yesterday. International Business Machines Corp may be the front-runner to acquire the Indian company, the Business Standard reported on Thursday, citing unidentified people familiar with the situation.

Satyam shares rose as much as 19 percent, valuing the company at 28.2 billion rupees (US$547 million). Its state-appointed board of directors is expediting the sale to woo back investors after founder and former chairman Ramalinga Raju said in January that he inflated assets by more than US$1 billion, pushing down the stock price by almost 80 percent.

"This means that the process can now move forward because the more Satyam delays, the greater the risk that customers will desert it," said Apurva Shah, head of research at Mumbai-based Prabhudas Lilladher Pvt.

IBM, the world's largest computer-services provider, and Larsen & Toubro Ltd, India's biggest engineering firm, are the leading contenders to buy Satyam, said Global Equities Research LLC in a report.

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IBM may scoop up the fraud-hit Satyam

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