TechMa buries Satyam Computer in itself – finally

Two weeks after it got an approval from the Andhra Pradesh High Court, software firm Mahindra Satyam on Tuesday formally announced its merger with Tech Mahindra, creating India’s fifth-largest IT services firm.

The merged entity will take Tech Mahindra’s name – based on mass employee consensus.

“Today, we have fulfilled the commitment made in 2009, when we acquired Satyam, to jointly become one of the largest, diversified players leveraging technology for business solutions. Tech Mahindra is a testimony to the tireless efforts of our associates and the trust reposed by our investors,” Anand Mahindra, group chairman, Mahindra & Mahindra, tweeted.

The boards of Tech Mahindra and Mahindra Satyam had approved the merger on March 21 last year. After an approval from the Bombay High Court, the merger had been awaiting clearance from the Andhra Pradesh High Court, which gave the nod on June 11.

C P Gurnani will remain the managing director and CEO of the new entity. Anand Mahindra has been appointed chairman, while Milind Kulkarni will be the new CFO. Vineet Nayyar will continue to remain the executive vice-chairman of the company.

Tuesday’s announcement was the final step in the merger process, which included the approval of the Registrar of Companies from Bombay and Andhra Pradesh. The formal merger process, which was initially expected to take two months, could be completed much earlier since the stakeholders who were against the merger failed to raise any more concerns on the companies’ amalgamation post the nod from the AP court, said a company spokesperson.

As per the company, Satyam will formally stop trading on stock exchanges on July 5.

Pune-based Tech Mahindra owns close to 43% of Satyam. It is offering one share in itself for every 8.5 shares of Satyam to absorb the company.

The management has also confirmed that there will be no employee loss due to the merger, and the combined total headcount would be around 84,000, with the entity generating revenues of around $2.7 billion, servicing 540 customers across 46 countries.

An industry expert said the merged entity will focus on three verticals – telecom, IT consulting and BPO and enterprise business. “Retaining Tech Mahindra’s name does not mean that telecom will be a larger focus. After all, Satyam was acquired so that the company would have better play in the non-telecom business. The biggest advantage of the merger will be the company’s ability to bid for larger deals, thanks to their larger size and bigger cash pile. In a couple of quarters, we should see the impact of this improved deal flow and cash on the company’s margins,” said the expert, requesting anonymity.