After saying it had lost interest in acquiring Satyam Computer Services in February, IT outsourcing services provider iGate Corporation made a surprise announcement on Friday that it had formally bid for the troubled company by filing an Expression of Interest before the deadline.
Meanwhile, the government-appointed board of Satyam on Friday announced that the process of registration of bidders, which ended on Thursday, "has received adequate response from Indian and international bidders, including private equity firms". It did not, however, disclose names.
Indian players Larsen & Toubro, Spice Group and Tech Mahindra figure among the bidders that completed the first step of registration, which closed on Thursday at 5 pm. Global majors like IBM, Hewlett-Packard (HP) and Computer Sciences Corporation (CSC) are understood to have been evaluating the deal. All these companies declined to comment.
The Satyam stock dipped 3.6 per cent on the Bombay Stock Exchange to close at Rs 45.50 on Friday.
The Satyam board also said it had taken steps to release the Request for Proposals (RFP) in the course of the day to all registered bidders. It has also requested the former Chief Justice of India, S P Bharucha, to oversee and guide the Board through the selection process, to which he has agreed.
Under the procedure that the board finalised, the EoI from bidders and proof of funds of Rs 1,500 crore ($290 million based on exchange rate of Rs 51.635=$1) are expected to be received by 5 pm on Friday, March 20.
Bidders that submit compliant EoIs will have access to data and information regarding the company to enable them to submit technical and financial bids. The Phaneesh Murthy-run, California-headquartered company said it filed an EoI because Satyam's government-nominated board had set a deadline. "We still believe it is a long shot for us to consummate this transaction in its current form," said Phaneesh Murthy, CEO, iGate.
iGate is concerned that there might be a significant value erosion at Satyam, the same reason it gave for withdrawing interest in February. "Our interest in pursuing this transaction is subject to the evaluation of the financial position of Satyam and the extent of its possible value erosion," Murthy said.
Murthy is understood to be coming down to India from the US to oversee the bidding process.
As on December 31, 2008, iGate had $65.6 million (around Rs 335 crore) in cash and short-term investments. The company is also understood to be in talks with private equity firms to raise funds for the transaction if it decides to go ahead.
iGate's revenue touched $218.8 million (around Rs 1,115 crore) for the full year ending December 31, 2008, against $201.7 million the previous year. The company had 6,658 employees as of December 31, 2008.
The company said by filing the EoI, it was expecting the latest financial statements of Satyam, including those for the quarter ended December 2008 and January and February 2009. This will also enable the company to understand the updated position on liabilities. If it did not receive this information immediately, the company said it would withdraw the EoI.
Meanwhile, Satyam CEO A S Murty briefed the board on his recent visit to Singapore and Australia to meet with customers and Satyam associates. He will be visiting the US for a similar purpose.
