Satyam board has informal floor price in mind
With just 72 hours to go, race for Satyam narrowed to 3 bidders & board has floor price in mind & will not accept bids if they are very low. India Inc's big-shots on Satyam
By Gaurie Mishra, ET Bureau |
NEW DELHI: The sale process for scam-tainted software company Satyam Computer Services is heading towards a conclusion with its government-appointed board meeting on Monday to examine the technical and financial bids of the interested parties. A person with direct knowledge of the situation told ET that the board has an informal floor price in mind and will not accept bids if they are very low. But this person added that the board was confident that such an eventuality will not occur and a buyer for Satyam would be finalised on Monday.
With just 72 hours to go, the race has narrowed to three bidders. Billionaire investor Wilbur Ross will make a joint bid with Nasdaq-listed IT firm Cognizant for Satyam, according to people familiar with the situation. Engineering giant L&T and tech firm Tech Mahindra are the other two bidders.
Both Cognizant and WL Ross, run by billionaire US investor Wilbur Ross, who made a fortune snapping up distressed firms and turning them around, had completed the due diligence for Satyam independently. Mr Ross���s name has been linked to more than one bidder and there has even been talk of his company teaming up with the eventual winner. One suitor has also objected to the prospect of two independent bidders entering into an alliance.
But a person familiar with the development said WL Ross and Cognizant will jointly bid and there will be no post-bid alliance. IBM, about whose intention there has been much speculation, is not among the final bidders. When contacted by ET, a Cognizant spokesperson declined to comment. A WL Ross executive in India also declined to comment.
While there has been some speculation about Tech Mahindra reviewing its decision to submit a bid because of uncertainty about the liabilities against Satyam, this person said the board expects the M&M company to make a bid.
According to the schedule drawn up by the Satyam board, the technical and financial bids will be submitted simultaneously by the bidders on Monday morning in the presence of former Supreme Court chief justice SP Bharucha, who has been appointed by the Company Law Board to oversee the sale process. It is expected that all the bidders will clear the technical criteria and their financial bids will then be opened.
With just 72 hours to go, the race has narrowed to three bidders. Billionaire investor Wilbur Ross will make a joint bid with Nasdaq-listed IT firm Cognizant for Satyam, according to people familiar with the situation. Engineering giant L&T and tech firm Tech Mahindra are the other two bidders.
Both Cognizant and WL Ross, run by billionaire US investor Wilbur Ross, who made a fortune snapping up distressed firms and turning them around, had completed the due diligence for Satyam independently. Mr Ross���s name has been linked to more than one bidder and there has even been talk of his company teaming up with the eventual winner. One suitor has also objected to the prospect of two independent bidders entering into an alliance.
ADVERTISEMENT
M&M may bid for Tech MahindraBut a person familiar with the development said WL Ross and Cognizant will jointly bid and there will be no post-bid alliance. IBM, about whose intention there has been much speculation, is not among the final bidders. When contacted by ET, a Cognizant spokesperson declined to comment. A WL Ross executive in India also declined to comment.
While there has been some speculation about Tech Mahindra reviewing its decision to submit a bid because of uncertainty about the liabilities against Satyam, this person said the board expects the M&M company to make a bid.
According to the schedule drawn up by the Satyam board, the technical and financial bids will be submitted simultaneously by the bidders on Monday morning in the presence of former Supreme Court chief justice SP Bharucha, who has been appointed by the Company Law Board to oversee the sale process. It is expected that all the bidders will clear the technical criteria and their financial bids will then be opened.
ADVERTISEMENT
If the financial bids are more than the board���s informal floor price, the highest bidder will be declared by the winner. However, if the difference between the price quoted by the highest bidder and the others is 10% or less, the other bidders have the option to take the bidding process to the next round. This will be done through an open auction with the highest price in the earlier round becoming the floor price for the next. The Satyam scrip closed at Rs 47, up 3.9% in a flat Mumbai market.Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
