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Tech Mahindra now controls Satyam

INDIAN telecommunications firm Tech Mahindra Ltd has bought a controlling stake in Satyam Computer Services Ltd, the outsourcing giant nearly brought down in a US$1-billion fraud.

Tech Mahindra purchased 31 percent of Satyam for US$351 million, the highest bid submitted before yesterday's morning deadline. It will also make an offer on the open market to buy an additional 20 percent of Satyam.

Tech Mahindra, which is owned by India's Mahindra & Mahindra Ltd and BT Group Plc, beat out Larsen & Toubro Ltd, one of India's largest engineering conglomerates, which acquired a 12-percent stake in Satyam from late last year into January.

"We hope this will infuse greater confidence and comfort amongst customers," Kiran Karnik, Satyam's chairman, said yesterday.

The winning bidder must be approved by the government.

Satyam was plunged into turmoil on January 7 when founder B. Ramalinga Raju confessed to a US$1-billion fraud.

Criminal charges

Raju and eight others, including two auditors from Price Waterhouse, are facing charges of criminal conspiracy, cheating and forgery for allegedly stealing millions of dollars from the company.

Satyam, once India's fourth-largest outsourcing company, has been fighting for its survival since Raju's confession. The sale had taken on urgency amid media reports that clients and staff have been leaving.

Suitors faced the difficult task of valuing Satyam before its scrambled books had been untangled. Satyam, which is listed on the New York Stock Exchange, also faces a spate of class action lawsuits in the United States.

Fitch Ratings Ltd was so concerned about these uncertainties that it withdrew its rating from Tech Mahindra after the company expressed interest in acquiring Satyam.

Tech Mahindra's 31 percent stake in Satyam will be acquired by buying new Satyam shares.



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