Tech Mahindra-Satyam merger stalled by ‘certain issues’

Has the merger between Tech Mahindra and Satyam Computer Services hit a roadblock? Indications given by the Satyam management suggest that the merger is not going to be immediate and there are certain issues that coming in the way of integrating both the companies.

“Consultations with various board members on this issue have started. But, there are certain wrinkles to be ironed out. It is a process. We are not going to that (the merger) in a hurry,” Vineet Nayyar, Satyam’s chairman, said.

Till recently, the company has been hoping to expedite the process of merger.
During the restatement for financials, the management had indicated that an application for carrying out the merger would be filed in the Andhra Pradesh and Mumbai high courts after the quarterly results on November 15.

While not elaborating on the wrinkles to be ironed out, Nayyar said that the merger would happen only during the end of next financial year.
“It is difficult to put a timeframe to the completion of the process. But, we think we should be able to do it by the end of next year,” he said.

Nayyar said difficulty in achieving rapid growth and class-action suits pending in the US courts would remain key challenges.

On New York Stock Exchange relisting, he said Satyam will achieve US GAAP compliance in the next five to six months.    

“Then we will decide whether to go to the NYSE or continue like this,” he said.
Interestingly, the company continues to carry the risk of Upaid and income tax related litigations.

In connection with the lawsuit filed by Upaid, Satyam deposited $70 million last fiscal into an escrow account pursuant to a settlement agreement to settle the litigation.

It had obtained a favourable ruling from the Supreme Court of the state of New York declaring that the Upaid was solely responsible for any tax liability under Indian law in respect of the settlement amount.