India: Satyam merges with Tech Mahindra to create $2.4 bn co

Mumbai, Mar 21 (PTI) India's diversified Mahindra Group today announced the amalgamation of its two technology companies, under which Mahindra Satyam will merge with parent Tech Mahindra, creating a USD 2.4-billion entity that will be the 5th largest software firm in India. "This merger is a key part of our strategy to deliver industry leading performance and this would make us a company with an annual revenue of USD 2.4-billion approximately, with more than 75,000 workforce and over 350 active clients across 54 countries," Tech Mahindra Vice-Chairman and Managing Director Vineet Nayyar told reporters here. Nayyar, who is also Chairman of Mahindra Satyam, said the merger happens now as the company has achieved all the targets set for itself and it was appropriate to start the merger process as the new company is ready to take off. The merger ratio is pegged at 8.5:1, with every 8.5 shares of Mahindra Satyam fetching one share of Tech Mahindra. Nayyar said the new entity will be head-quartered in Mumbai and the merger will be effective retrospectively from April 1, 2011, while the full integration process will take another nine months. He also said both the companies will have separate AGMs for the 2011-12 fiscal ending March 31, 2012. Nayyar said the new management structure is not finalised yet as a revamp of the existing management is on the anvil. To a query on a possible delisting of Satyam shares from the Nasdaq, Nayyar answered in the negative. Earlier, the companies informed the exchanges that their boards approved the merger with an exchange ratio of 2:17 ratio. Two shares of Tech Mahindra will be given for 17 shares of Mahindra Satyam, with shareholders getting one share of Tech Mahindra for 8.5 shares of Satyam. The companies said 204 million equity shares of Rs 2 each of Mahindra Satyam will be transferred to a trust of which Tech Mahindra will be the beneficiary. The companies were advised by JP Morgan, Morgan Stanley and KPMG for the merger process. Tech Mahindra took over the reins of the scam-hit Satyam Computer Services in April 2009 by picking up 31 per cent stake for USD 351 million at Rs 58 per share, a 23 per cent premium, in a government monitored deal. The company was rebranded as Mahindra Satyam. PTI