Tech Mahindra to go for preferential allotment in Satyam
By Pallavi S (VCCircle.com)
Tech Mahindra's open offer to acquire 20% from existing shareholders got a lacklustre response.
Tech Mahindra will pick new shares of Satyam Computers through another preferential allotment after getting a tepid response, as anticipated, to its open offer to acquire 20% from existing shareholders.
The open offer which was made at a price of Rs 58 a piece was much less than the ruling stock price which hovered above Rs 70 during the period of open offer. The offer was open between June 12 and July 1. Tech Mahindra said it would disclose the actual additional stake bought in the open offer on July 8.
The IT firm which has earlier picked 31% stake in Satyam as per the deal struck in April, now has the option of subscribing to new shares of Satyam. As per the original purchase condition, if Tech Mahindra didn’t get enough shares to hike its stake up to 51% through the open offer, it could fall back on another preferential allotment.
Tech Mahindra had earlier acquired 302.76 million shares or 31% stake for Rs 1,756 crore. It had then come up with a mandatory open offer to buy 199 million shares(20% stake) from existing shareholders for Rs 1,154.7 crore, translating into total acquisition cost of Rs 2910.7 crore.
The poor response to the open offer will benefit Satyam as a company. This is because the same money will be used to strengthen the balance sheet of the scandal hit IT firm, instead of paying off shareholders.
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