Abstract

This case study analyzes the merger between Tech Mahindra and Mahindra Satyam. On August 10, 2011, at the 24th Annual General Meeting (AGM) of Mahindra Satyam, minority shareholders opposed a proposal by Vineet Nayyar, Chief Executive Officer, Mahindra Satyam, and the management team to merge Mahindra Satyam with Tech Mahindra. However, Vineet Nayyar’s proposal during the AGM earned mixed reactions from many observers. Initially, the minority shareholders of Mahindra Satyam were apprehensive about the timing of the merger with regards to the unattractive valuations and the number of shares they would receive in exchange for one Tech Mahindra share. Although, both companies had strong presence globally, the companies had to resolve few other problems before going for the merger.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Merger and acquisition and types of synergies
• Valuation of company
• Exchange ratio of the shares

Keywords

Exchange ratio, Merger, Acquisition, synergy, Vineet Nayyar, FCFF, FCFE, Valuation, Minority, shareholders, Mahindra, Tech, Satyam, Maytas, BPO, International Data Corporation (IDC), consolidation