Satyam Selects Tech Mahindra to Acquire Majority Interest
Mumbai, 13 April 2009: Satyam Computer Services Ltd. (NYSE: SAY;
BSE: SATYAM; NSE: SATYAMCOMP) (the "Company"), announced today
that its Board of Directors (the “Board”), has selected Venturbay
Consultants Private Limited, a subsidiary controlled by Tech Mahindra Limited (“Tech
Mahindra”) as the highest bidder to acquire a controlling stake in the
Company, subject to the approval of the Hon'ble Company Law Board.
The Company has been administered by a new
Board appointed pursuant to the orders of the Hon’ble Company Law Board dated
January 9, 2009. The process to select a strategic investor has reached this
significant stage within three months of the new Board’s first meeting.
“On behalf of all
Satyamites and their families, we congratulate Tech Mahindra on being the
highest bidder. The selection of the highest bidder, in a fair, open and
transparent process, signals a new stage for the Company in its progress
towards stabilization and growth. We
hope this will infuse greater confidence and comfort amongst customers, who
continue to be happy with Satyam's excellent service delivery. This event ought
to dispel the anxiety of all stakeholders as it re-positions the Company’s
commitment to revival and good governance.” said Kiran Karnik, the Chairman of
the Board.
The Board selected Tech Mahindra through a
global competitive bidding process launched by the Company on March 9, 2009,
which was designed in accordance with the orders of the Hon'ble Company Law
Board, approved by the Securities Exchange Board of India (the “SEBI”)
and conducted under the supervision of Justice Bharucha. Pursuant
to the bidding process, on April 13, 2009, bidders submitted their technical
and financial bids. The Board under the supervision of Justice Bharucha first evaluated
technical bids based on predetermined criteria submitted by three bidders, previously
notified to the bidders. The technical criteria covered information on the
bidder, its promoters’ (if any) and persons acting in concert. The technical
criteria included:
- corporate
governance and management track record;
- corporate
behavior record, including corporate social responsibility policies and
information pertaining to past conduct in companies managed by the bidder;
- organizational
ability and experience in owning, operating and managing information
technology companies, global companies of the scale and scope of the
Company and distressed companies;
- track record in
managing distressed companies;
- revenues and
profitability from Indian and overseas operations; and
- strategic
plan for the Company.
After evaluating
each bidder’s technical bid and determining that each bidder qualified, the
Board and Justice
Bharucha opened each shortlisted bidder’s financial
bid in the presence of each shortlisted bidder and ranked them based on price. Since
there was no bid within at least 90% of Tech Mahindra's bid, which was the
highest bid, the Board, finding Tech Mahindra’s bid to be satisfactory and in
the interests of the Company, declared Tech Mahindra as the highest bidder. Upon being declared the highest bidder, Tech
Mahindra and the Company executed a share subscription agreement with the
Company on April 13, 2009 (the “Share Subscription Agreement”). Pursuant
to the Share Subscription Agreement, Tech Mahindra has
agreed to subscribe to and acquire 30,27,64,327 (Thirty Crores Twenty
Seven Lakhs Sixty Four Thousand Three Hundred and Twenty Seven Only) shares of
the Company (the “Initial Shares”), representing thirty one percent
(31%) of the share capital of the Company after giving effect to the issuance
of the Initial Shares (the “Enhanced Share Capital”) at a price of Rs.
58 per share (the “Preferential Allotment”) thereby agreeing to infuse
Rs. 1,756 Crores (or approximately US$ 351 million based on the exchange rate
of Rs. 50 to US$1) (the “Initial Subscription Amount”) into the Company.
Tech Mahindra is required to deposit the Initial Subscription
Amount and the requisite escrow amounts for the Public Offer (as defined below)
in accordance with the Takeover Regulations (collectively, the “Total Acquisition Funds”) in separate escrow
accounts on or before April 21, 2009. If Tech Mahindra desires to take control
of the affairs of the Company simultaneously with the Preferential Allotment, Tech
Mahindra will be required to deposit in escrow the total funds necessary to
consummate the Public Offer. The
Preferential Allotment is subject to fulfillment of certain conditions and
obtaining the required regulatory approvals, including approvals from the
Company Law Board (the “CLB”) and the SEBI. In the event Tech Mahindra does
not deposit the Total Acquisition Funds on or before April 21, 2009, the next
highest bidder will be considered the highest bidder and the details will be
announced by the Board.
Board members Mr. Deepak
Parekh and Mr. S.B. Mainak abstained from discussion regarding the selection of
the highest bidder. This was due to possible conflicts of interests since
Deepak Parekh sits on the board of directors of the controlling shareholder of
one of the bidders, while S.B. Mainak is the executive director of a
significant shareholder of another bidder.
Under the SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the “Takeover Regulations”), Tech Mahindra will
be required to make a mandatory cash tender offer to acquire an additional
minimum of 20% of the Enhanced Share Capital and convertible instruments (the “Public
Offer”) at a minimum price of Rs. 58 per share (or approximately US$ 1.16
per share based on the exchange rate of Rs. 50 to US$1). While the Public
Offer will be made on a worldwide basis for the Company’s shares, holders of
the Company’s American Depositary Shares (the “ADSs”) in the United States are expected to be able to participate
in the Public Offer through a facility to be implemented by Citibank, N.A., the
depositary for the ADSs. Pursuant to the
Takeover Regulations, Tech Mahindra will be required to make a public
announcement of the Public Offer within four working days of receiving approval
from the CLB for the Preferential Allotment and open the Public Offer to
tendering by shareholders and ADS holders no later than 55 calendar days after
the date of such public announcement.
If, upon closing of the Public Offer, Tech Mahindra will
have acquired less than 51% of the Enhanced Share Capital pursuant to the
Preferential Allotment and the Public Offer, Tech Mahindra will have the option
to subscribe to additional newly issued shares (the “Additional Shares”) of the Company (the “Subsequent Preferential
Allotment”), such that the shares acquired through the Preferential
Allotment, the Public Offer and the Subsequent Preferential Allotment, if any,
will be not more than 51% of the Enhanced Share Capital after giving
effect to the issuance of the Additional Shares.
As
previously disclosed, the CLB exempted the Company from shareholder approval
requirements in connection with the Preferential Allotment that would otherwise
be required under the Companies Act, 1956.
Goldman Sachs and Avendus
Capital acted as financial advisors to Satyam. Amarchand & Mangaldas &
Suresh A. Shroff & Co acted as Indian legal counsel to Satyam. Latham &
Watkins LLP acted as U.S. legal counsel to Satyam.
This announcement is neither an
offer to purchase nor a solicitation of an offer to sell the Company's shares. The Public Offer can only be made through a letter of
offer and related tender offer materials. Security holders are urged to read
the offeror's tender offer statement on Schedule TO to be filed with the
Securities and Exchange Commission (the "SEC") in connection with the Public Offer, including any
exhibits, amendments or supplements to the statement, when they become
available, because they will contain important information. Each of these
documents will be filed with the SEC, and security holders may obtain them for
free from the SEC's website (www.sec.gov). A
description of which documents will be obtainable for free from the offeror,
and instructions as to how to obtain such documents, will be announced by the
Company or the offeror prior to the commencement of the Public Offer.
About
Satyam
Satyam (NYSE: SAY), a
leading global business and information technology services company, delivers
consulting, systems integration, and outsourcing solutions to clients in
numerous industries across the globe. Satyam leverages deep industry and
functional expertise, leading technology practices, and an advanced, global
delivery model to help clients transform their highest-value business processes
and improve their business performance. The company's professionals excel in
engineering and product development, supply chain management, client
relationship management, business process quality, business intelligence,
enterprise integration, and infrastructure management, among other key
capabilities.
Satyam development
and delivery centers in the US, Canada, Brazil, the UK, Hungary, Egypt, UAE,
India, China, Malaysia, Singapore, and Australia serve numerous clients,
including many Fortune 500 organizations. For more information, see www.satyam.com.
Safe Harbor
This press release
contains forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. The forward-looking statements contained herein, including statements regarding the deposit of the Total
Acquisition Funds into escrow, the consummation of the Preferential Allotment,
the making and consummation of the Public Offer, the price or amount of shares
being sought in the Public Offer, whether a Subsequent Preferential Allotment
will be necessary, the Company’s ability to complete a restatement of its
financial statements, the Company’s ability to provide service delivery to
customers and to return to profitability and the ability of Tech Mahindra as a
shareholder and control person to facilitate any or all of the foregoing,
are subject to certain risks and uncertainties that could cause actual results
to differ materially from those reflected in the forward-looking statements. In
particular, there can be no assurance that Tech
Mahindra will deposit the Total Acquisition Funds in escrow on or before April
21, 2009, the Preferential Allotment will be consummated, the Public Offer will
be made or consummated on the terms described in this press release, a
Subsequent Preferential Allotment will be necessary or the Company will become
profitable and successful with Tech Mahindra as a shareholder and control
person. Satyam undertakes no duty to update any forward-looking
statements.
