Tech Mahindra inches closer to close Satyam deal
By Tarry Singh at 13 April, 2009, 4:05 am
Tech Mahindra will gain control of a business serving Cisco Systems Inc. and Nestle SA, strengthening its ability to compete with larger rivals Tata Consultancy Services Ltd. and Infosys Technologies Ltd. The sale may restore investor confidence and stem client defections after former Chairman Ramalinga Raju said Jan. 7 he inflated assets by more than $1 billion.
Tech Mahindra needs to “act fast and successfully integrate Satyam in the next four or five weeks” to benefit from the purchase, said Tarun Sisodia, a Mumbai-based analyst at Anand Rathi Financial Services Ltd., which recommends investors “buy” Tech Mahindra. “For Satyam, it’s simple, they get a new management and the uncertainties are over for the company.”
Tech Mahindra, 31 percent owned by BT Group Plc, climbed 12 percent to 358.35 rupees in Mumbai trading, the most since Oct. 21. Satyam added 3.2 percent to 48.75 rupees. The purchase is subject to regulatory approval.
Tripling Workforce
Tech Mahindra, set up as a venture between BT Group and India’s largest utility-vehicle maker Mahindra & Mahindra Ltd. in 1986, counts the British telecommunications company as its largest client and mainly serves phone companies in Europe. The software exporter had 25,429 employees at the end of December, about half of Satyam’s workforce of 48,000.
“Tech Mahindra will benefit from this because with Satyam they will overnight become the fourth-largest IT firm in India,” said Diptarup Chakraborti, Mumbai-based principal analyst at researcher Gartner Inc. “It helps them diversify from the single line of service they have, and reduce their dependence on their largest client.”
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