Strategic Sale of Satyam Computers

            
 
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Case Details:

Price:

Case Code : BSTR337 For delivery in electronic format: Rs. 400;
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping & Handling Charges

Themes

Mergers and Acquisitions
Case Length : 20 Pages
Period : 2008-2009
Pub Date : 2009
Teaching Note : Not Available
Organization : Satyam Computer Services Limited, Tech Mahindra Limited
Industry : Information Technology / Software Services
Countries : India

Abstract:

The case discusses in detail the events that happened in India-based Satyam Computers, after its Founder and Managing Director, Ramalinga Raju confessed of being responsible for accounting irregularities in the company amounting to Rs.70 billion. The confession impacted not only the employees and customers of Satyam, but the IT sector in the country as a whole. The Government of India, intervened immediately, and constituted a new board for the company, whose focus was to find a strategic investor for Satyam. The board had to carry out this task in a fair and transparent manner, as soon as possible. At the same time, it also ensured continuity of operations, and stopping exodus of clients.

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The board then came up with guidelines for the sale of Satyam that included competitive and open bidding process, and criteria for technical bids. The global bidding process witnessed expression of interest from several companies, and ultimately three companies remained in the fray to acquire the company. Of these, Tech Mahindra emerged the winner as the price it quoted was the highest. The case discusses in detail the bidding process, the reasons due to which several companies opted out of the process, and the selection process of the final bidder. The case also examines the benefits that Tech Mahindra expects and challenges it is likely to face after the acquisition of Satyam.

Issues:


Study the concept of strategic sale of companies.

Understand the reasons that led to the problems at Satyam.

Examine the role played by the government constituted board.

Analyze the bidding process and criteria for selecting the winner.

Examine the synergies and challenges for Tech Mahindra after acquiring Satyam.

Contents:

  Page No.
Resurrection of Satyam 1
Background Note 2
The Government Steps In 4
The Bidders 8
Tech Mahindra is the Winner 9
The Synergies 11
The Challenges 12
Exhibits 14

Keywords:

Satyam Computer Services Limited, Tech Mahindra Limited, BT Plc, Acquisition, Strategic Sale, Strategic Investor, B. Ramalinga Raju, Accounting fraud, Government of India, Company Law Board, Securities and Exchange Board of India, L&T Infotech, WL Ross & Company, Client attrition, Global financial crisis, Maytas Properties Private Limited, Maytas Infrastructure Limited, Global competitive bidding, Expression of Interest, Transaction structure, Technical Bids, Financial Bids, Venturbay Consultants Private Limited, Deepak Parekh, Kiran Karnik, Synergies, Merger Integration

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