Satyam in talks for a EU acquisition, Australian deal to follow

Even as decks are being cleared for its integration with Tech Mahindra, Satyam Computer Services is bracing for acquisitions in Europe and Australia.

While the European acquisition would be of an aerospace company, Satyam is hunting for companies Down Under that would align with its areas of operations in Australia.

The ticket size of the deals is expected to be $50-150 million.
Satyam is in an advanced stage of discussions for a “major” purchase in aerospace, Lakshmanan Chidambaram, senior vice-president for sales and operations at Satyam, told Bloomberg from Boston on Tuesday.

“We would make strategic acquisitions that help us get to the next level, even in areas where we’re fairly established like aerospace,” Chidambaram said. “There could be gaps — either you organically improve it or you buy it out.”

Company sources said the combined balance sheet of Tech Mahindra and Satyam gives it the bandwidth to go for big acquisitions.

Aerospace and defence (A&D) is relatively a stronger vertical in Satyam where it has over 1,000 dedicated employees.

In Australia, Satyam is scouting for targets with a budget of $50-100 million.

Sources said the Australian market has been showing significant promise and an inorganic expansion strategy would catapult Satyam into a major league there. As such, the Hyderabad-based firm is scouting for entities that are strong in providing IT services in healthcare, mining and banking & financial services.

Satyam has also been eyeing the opportunity from the Australian government offering IT and ITeS services.

Meanwhile, Satyam is also preparing for organic growth in India, and plans to have about 5,000 employees in the next three years.

Following the merger, the combined entity would have about 2,200 employees catering to the clients in Australia and New Zealand markets.

Qantas and National Australian Bank are already the company’s customers.

Though with a diversified portfolio, Satyam has been eyeing the enterprise solutions and telecom as the core areas post the merger. With Tech Mahindra remaining strong in the telecom vertical, the merged entity is looking at newer areas, including mobility and a convergence of sorts of enterprise solutions and mobility.