Mumbai: Fraud-hit Satyam Computer Services said on Friday it would accelerate plans to find a suitor after the market regulator amended its takeover rules, and the chairman of the outsourcing firm said new bidders were likely to emerge.
The Securities and Exchange Board of India (SEBI) on Friday said it would relax its takeover rules if approached by a target firm that met certain conditions, which Satyam appeared to do, and had outlined an acceptable bidding plan.
"It is good news. We can speed up the process," Satyam chairman Kiran Karnik told CNBC TV18. "A few people have indicated publicly their interest ... there are others we know who are waiting for a formal announcement of what exactly the process will be," said Karnik, who heads the government-appointed board of Satyam that is trying to salvage the firm at the centre of India's biggest corporate scandal.
The board had approached SEBI for an exemption from takeover rules, but the regulator had said earlier this month it would change its rules rather than grant a one-off exemption. Indian law requires the buyer of a 15 percent stake in a firm to make an open offer for another 20 percent of the target company, at the average share price over the last 26 weeks.
On Friday, Satyam shares closed at Rs 46.30, compared to a 26-week average of Rs 227.72. Satyam shares have plunged since mid-December, first on a planned deal to buy related companies and then after founder Ramalinga Raju quit on January 7, disclosing profits had been overstated for years and $1 billion of cash and bank balances did not exist.
"There was no question of paying more than Rs 200 for a company whose shares are now trading at less than Rs 50. So it will obviously increase the interest among bidders," said R K Gupta, managing director at Taurus Mutual Fund.
Conditions set by SEBI to be eligible for an exemption included that the government or a regulator had dismissed the board and appointed a new one, and that the relaxation was in the interests of the public, investors and the securities market.
Potential suitors to have declared an interest include India's Larsen & Toubro, Spice Group and Hinduja Group. "I'm sure there will be many people who are interested," said Karnik, adding the bidding process would be transparent and competitive.
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"After all it's a great company with a tremendous track record and excellent customers, and a great asset in terms of talent. So there are bound to be a lot of suitors who are interested." Larsen & Toubro has built up a 12 percent stake, to be the largest shareholder in Satyam, and has not ruled out raising its stake further.
There are some key uncertainties for bidders--Satyam's accounts are yet to be restated and the company faces a number of class action lawsuits in the United States.
On Thursday, Karnik had said the bidding process would be outlined in 7 to 10 days, and said the sale process could get underway before the accounts were restated. U.S.-based iGate Corp expressed interest in Satyam in January, but last week backed away citing the lack clarity on the company's liabilities.
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