Tech Mahindra wins bid to acquire Satyam

By Janaki Krishnan and Saikat Chatterjee

MUMBAI (Reuters) - Tech Mahindra will pay more than $550 million for a controlling stake in Satyam Computer Services, throwing a lifeline to the fraud-hit firm and propelling itself into the top tier of Indian outsourcing firms.

Tech Mahindra, 31 percent owned by Britain's BT Group Plc, beat engineering conglomerate Larsen & Toubro, which many analysts had seen as front runner, as well as private equity firm WL Ross & Co to be the highest bidder for a stake of up to 51 percent in the company at the centre of India's biggest corporate scandal.

Satyam's sale could help restore confidence in India's IT services sector at a time when the global economic downturn has slowed growth. But Tech Mahindra will still have to move quickly to restore stability at its target.

"Tech Mahindra will really have to act fast now and if they don't ... client erosion will continue at Satyam," said Tarun Sisodia, head of research at Anand Rathi Financial Services.

Three months ago, Satyam's founder and chairman shocked investors by saying profits had been overstated for years, putting in doubt the survival of a company once ranked as India's fourth-largest software services exporter.

The government quickly stepped in and sacked the board to limit damage to India's once-shining IT sector.

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