Merger enriches Tech Mahindra while Satyam fades into oblivion

HYDERABAD: It was touted as the case of a poor groom walking away with a rich, distressed bride and a fat dowry, a match that caused heartburn to the bride's kin.
Which is why when in March 2012 Mahindras announced merging Satyam Computers with Tech Mahindra (TechM), offering one TechM share for every 8.5 Satyam shares there was opposition from Satyam's minority shareholders and employees. The scam notwithstanding, they felt, Satyam's fundamentals were stronger than its suitor's and the swap ratio was skewed in favour of TechM shareholders.

Many felt the Mahindras, who acquired Satyam for Rs 2,889 crore in April 2009, got a company of Satyam's size dirt cheap just because of the scam. Three years after the wedding, the match has brought prosperity and fame to the groom, the bride has faded into oblivion.

As its executive vice-chairman Vineet Nayyar had then said: “We did a survey and the overwhelming view...was th-at the Satyam name must be dropped as it was synonymous with fraud.“

He had admitted it was a win-win for TechM. “We are now part of the big boys. The merger gives us greater credibility and the greatest advantage is that when a client looks at us, it's as a seamlessly functioning entity ,“ Nayyar had said in 2013.

The Mahindras coughed up over $212 million to settle Satyam's overseas liabilities, including suits filed by US investors. The company continues to battle legal liabilities in India with Hyderabad HC refusing to exempt TechM from being an accused in ED's case in the Satyam fraud. Nearly Rs 822 crore worth of Satyam FDs were frozen by ED labelling them proceeds of Raju's crime.

The merger made TechM India's fifth-largest IT company, with a turnover of around $2.7 billion. Analysts bet big on TechM and it's one of the top picks in IT stocks. “TechM leveraged Satyam's strengths and the company's performance was much better than other IT stocks in the last two years. The Satyam skill sets helped TechM scale up,“ said Satish Kantheti, joint MD.