INVESTMENT WORLD: What's in store for shareholders?

from BUSINESS LINE, April 19, 2009 The Satyam saga seems to have ended sooner than anyone expected, with Tech Mahindra (through 100 per cent subsidiary Venturbay Consultants) making a winning bid for the beleaguered company, paying Rs 2,889 crore for a 51 per cent stake.

While Satyam's government-nominated Board can now consider this "mission accomplished", the onus of carrying on the fraud-hit company's business and returning it to profitability now rests with Tech Mahindra. This article looks at the business and financial implications of this buyout for Tech Mahindra and evaluates what Satyam shareholders can do, with the limited information so far available to them.

Tech Mahindra shareholders Though the stock market has greeted the acquisition with a thumbs-up for the Tech Mahindra stock (up 12 per cent the day of the deal), that's merely a quick reaction to the low price at which the mid- sized IT company bagged Satyam.

It is not often that an acquisition of this size is made at a multiple of less than one time the target's revenues (Satyam's adjusted revenues are said to be in the region of Rs 6,000 crore, while Tech Mahindra's outlay is just …