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Tech Mahindra's open offer for Satyam ends
Tech Mahindra's public offer to acquire an additional stake in Mahindra Satyam ended on Wednesday, and analysts said the offer would have received a poor response due to a spike in the share price of the fraud-hit outsourcer.
Tech Mahindra, majority owned by Mahindra & Mahindra, will now go for a second round of preferential allotment of shares to gain a majority stake in Mahindra Satyam.
It bought a 31 per cent stake of new equity in Mahindra Satyam in April, and on June 12 launched an open offer to buy up to 20 per cent in the open market at 58 rupees a share to take its stake to 51 per cent.
But shares in Mahindra Satyam, earlier known as Satyam Computer Services, rose 3.7 per cent on Wednesday to 73.55 rupees and the stock hasn't dipped below Rs 70 since the launch of the open offer.
"The response to the offer would have been very, very poor as the market price of Satyam shares is sharply higher than the open offer price," said Tejas Doshi, head of research at Mumbai brokerage Sushil Finance.
"I would be surprised if they get even 5 per cent of the shares that they were planning to buy."
Tech Mahindra, 31 per cent-owned by Britain's BT Group, said in a statement to the stock exchanges the final numbers of shares tendered and accepted in the public offer would be announced on July 8.
If the offer is not fully subscribed to Tech Mahindra can opt for a second preferential issue of shares by Satyam to raise its stake to not more than 51 per cent of the expanded share capital.
"They would go ahead and do it," Doshi said. "That will mean the money will go back to Satyam and strengthen the company."
Tech Mahindra said in the statement the second preferential allotment of shares would also be at Rs 58 a share.
A spokesperson at Tech Mahindra, based in Pune, refused to provide details on the open offer.
Satyam's founder and chairman shocked investors in January by saying profits had been overstated for years, putting in doubt the survival of a company once ranked as India's fourth-largest software services exporter.
Tech Mahindra made a bid worth around $580 million in April's auction for a controlling stake.
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