Decks cleared for Mahindra Satyam's merger with Tech Mahindratext_fields
Hyderabad: The Andhra Pradesh High Court Tuesday gave its nod for the much-awaited merger of Mahindra Satyam with its parent firm Tech Mahindra, which will create a $2.4 billion entity, the fifth largest Indian IT firm.
Clearing the decks for the merger, Justice N.R.L. Nageswara Rao dismissed a batch of petitions filed to stall the move.
Opposing the merger, 35 individuals and companies including the family members of Satyam Computer Services' founder Ramalinga Raju, two entities owned by engineering and construction firm IL&FS and minority shareholders had filed the petitions.
The Raju family and IL&FS, in their petitions, sought a refund of Rs.1,230 crore they claim to have lent Satyam before a crisis hit in January 2009.
The judge also said all investigations into the accounting fraud at the erstwhile Satyam Computer Services would continue.
Raju had on Jan 7, 2009 confessed to fudging the accounts of Satyam for years to the tune of at least Rs.7,136 crore. The biggest fraud in India's corporate history plunged the Hyderabad-based company into a crisis.
Mahindra Satyam has welcomed the court order.
"We are pleased with the decision of the court and our faith in the judiciary stands vindicated. The next step will be to formally conclude the integration process and accelerate our ambitious focus towards becoming a stronger force to reckon with in the IT industry and delight our stakeholders," said a company spokesperson.
Tech Mahindra bought the fraud-hit firm in April 2009 in an auction conducted by government-appointed directors and re-branded it as Mahindra Satyam. Soon after the acquisition, the merger was proposed. However, the same was delayed due to various disputes both in India and abroad.
Mahindra Group on March 21 last year had announced the amalgamation of its two technology companies.
"This merger is a key part of our strategy to deliver industry leading performance and this would make us a company with an annual revenue of $2.4-billion approximately, with more than 75,000 workforce and over 350 active clients across 54 countries," Tech Mahindra vice-chairman and managing director Vineet Nayyar, who is also chairman of Mahindra Satyam, had said.
The merger proposal was cleared by various bodies, including the Competition Commission of India, BSE Ltd, National Stock Exchange and the Bombay High Court.
The companies had informed the exchanges that their boards approved the merger with an exchange ratio of 2:17. It means two equity shares of Rs.10 each of Tech Mahindra will be given for every 17 shares of Rs.2 each of Satyam.
Opposing the ratio, the minority shareholders had filed a petition in Andhra Pradesh High Court. They had alleged that Mahindra group fixed the swap ratio in its favour.
The management of Mahindra Satyam had announced last month that four-year turn-around was over. "The turnaround of Mahindra Satyam is symbolically and practically complete," Nayyar had said. He also said the merger would open a new chapter for the company.
Mahindra Satyam's revenues during 2012-13 were Rs.7,693 crore, 20.3 percent more than the Rs.6,396 crore in the previous year.
The total number of employees of the company stood at 36,067 as of March 2013.