Twitter
Advertisement

Satyam-TechMa may rewrite the rules

Post merger, the outfit could emerge as the fifth-largest IT company in the country and is expected to have an Ebitda of about 17% at nearly $392 m.

Latest News
Satyam-TechMa may rewrite the rules
FacebookTwitterWhatsappLinkedin

Revenues of about $2.4 billion, an employee base of about 75,000 and over 350 active clients spread across 54 countries… we are talking about how the new entity is going to look like following the merger of Satyam and a bunch of other IT entities with Tech Mahindra. The process, which was formally set into motion on Wednesday, is expected to be complete in the next nine months.

The boards of Tech Mahindra and Satyam have also decided on a swap ratio to complete the all-stock deal. For every 8.5 shares of Rs 2 each, Satyam shareholders would get one share of Tech Mahindra of Rs 10 each.

“On a pro-forma basis, the Mahindra Group will own 26.3% in the combined entity, British Telecom (BT) will own 12.8%, 10.4% will be held as treasury stock, 34.4% to be held by public shareholders of Satyam and the balance 16.1% will be held by the shareholders of Tech Mahindra,” said Vineet Nayyar, vice-chairman and managing director of Tech Mahindra and chairman of Satyam.

The company is yet to decide on the new name of the joint entity though it has already been decided that the new entity would be based out of Mumbai.

To complete the process, Tech Mahindra will issue 10.34 crore new shares, which would raise its outstanding shares to Rs 23.08 crore and its equity capital to Rs 230.8 crore. While arguing that there are no overlapping verticals between Tech Mahindra and Satyam, C P Gurnani, Satyam’s CEO, said, “There are two or three customers that overlap between both the companies, and we will work on them.” According to the company officials, enterprise solutions and mobility are going to be the key verticals for the combined entity.

Touted to have the potential to emerge as the fifth-largest IT services company in the country, the entity is expected to have an Ebitda of about 17% at about $392 million in absolute terms. It’s expected to earn 18-19% revenue from the BT Group.

Interestingly, Satyam is not free of litigations. While a claim for about Rs 1,230 crore by 37 entities allegedly belonging to Satyam’s founder B Ramalinga Raju is still pending, an income tax demand, too, is shadowing Satyam. “We have been contesting these claims and we will continue to contest even after the merger,” Nayyar said.

Post-merger, the new outfit is expected to have a unified go-to-market strategy with a balanced mix of revenues from telecom, manufacturing, technology, media & entertainment, banking, financial services and insurance, retail and healthcare.

“Revenues will be well balanced with a diversified global footprint that would boast of contribution from the Americas at 42%, Europe at 35% and emerging markets at 23%,” Gurnani said.

Though approved by the boards of both the companies, the merger scheme is yet to go through the legal formalities, including a formal approval from the high courts of Mumbai and Andhra Pradesh and the Competition Commission.

Find your daily dose of news & explainers in your WhatsApp. Stay updated, Stay informed-  Follow DNA on WhatsApp.
Advertisement

Live tv

Advertisement
Advertisement