Satyam Computer Services Ltd invited bidders interested in buying a majority stake as the software company at the center of India’s biggest corporate fraud probe seeks to regain confidence with investors and clients.
Registrations began yesterday and bidders should submit their interest by Thursday, Satyam said in a press release yesterday.
Larsen & Toubro Ltd was expected to express its intention to bid, spokesman Deepak Morada said.
Satyam rose for the second day, gaining as much as 15 percent and valuing the company at 32.8 billion rupees (US$634 million). The computer service provider’s state-appointed board is betting a sale may woo back investors after the stock more than halved since chairman Ramalinga Raju said on Jan. 7 that he inflated assets by more than US$1 billion.
“Retaining customers and winning new orders will be the biggest challenge for a successful bidder,” R.K. Gupta, managing director of Taurus Asset Management Co in New Delhi, said by telephone.
Gupta owns Satyam stock as part of the 2 billion rupees he oversees in investments.
Undermining the sale, “this whole episode has come at a time of the recession, when other established firms are already facing problems,” he said.
The shares rose 14 percent to 47.90 rupees as of 12:25pm yesterday, extending the 20 percent gain the previous trading day, when India’s regulator cleared plans for the company to sell a 51 percent stake. The benchmark Sensitive Index declined by 1.9 percent yesterday.
Bidders, aiming to gain Satyam’s work force of about 50,000 employees and customers, including Cisco Systems Inc, may face the challenge of making offers before the Indian company restates its financials. The buyer will also have to consider potential liabilities from lawsuits filed against Satyam in the US.
Satyam will share as much financial and customer information as is legally permissible with bidders, chairman Kiran Karnik said on Feb. 24. The company had so far lost three “major” clients, including State Farm Mutual Automobile Insurance Co, Karnik said at the time.
International Business Machines Corp may be the front- runner to acquire the Indian company, the Business Standard reported on Thursday, citing unidentified people familiar with the situation. Karen Davis, a Shanghai-based IBM spokeswoman, declined to comment on the report.
Nomura Holdings Inc and Citigroup Inc are advising Larsen on its potential bid, an executive at India’s biggest engineering company said last Monday.
B.K. Modi, chairman of Spice Corp, whose Web site says the company has businesses in entertainment and communications technologies, said last week he planned to bid for a 51 percent stake in Satyam.
Tech Mahindra Ltd, the Indian software-services provider whose second-largest shareholder is BT Group PLC, will evaluate Satyam’s “legal exposure and business sustainability” before bidding, president C.P. Gurnani said in an interview.
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