Just three days after the successful bidding for a 31% stake of beleaguered IT firm Satyam Computer Services, Tech Mahindra on Thursday got the essential nod of the Company Law Board.
Sealing the proposal of acquisition, CLB granted extension to Tech Mahindra to restate and file audited results including publication of quarterly reports by December 31, 2009.
The approval of CLB has now cleared the way of Venturbay Consultants Pvt Ltd. – the subsidiary of Tech Mahindra to acquire 51 per cent of Satyam. Now, Tech Mahindra will also have to buy another 20% stake from open market to meet the obligatory 51% stake to own the company.
According to the norms of bid, Satyam Computers will have to issue 31% preferential share capital translating 30.27-million shares to Tech Mahindra in exchange of Rs 1,756-crore which Tech Mahindra had bid in the auction.
CLB also directed Tech Mahindra not to appoint more than four nominees in the existing board of directors, while the present six directors appointed by the Central Government would continue to be on the board until it issues further order.
The Company Law Board also directed that the Central Government need not to appoint any additional directors to the Satyam board.
According to regulation of acquiring norms, the acquiring company cannot break up the tie for at least three years from the date of allotment nor can it sell any material assets of the company for two years from the date of completion of the public offer.
The mid-level IT exporting company in the April 13 bidding surpassed the engineering giant Larson & Toubro (L&T) by posting Rs 58 for a share; L&T only offered Rs 49.50, while the third and the last bidder Wilbur bade at Rs 20 per share.
The other three companies including Spice Corporations, IBM and iGate who first showed their interest in the bidding later withdrew accusing ‘lack of transparency in the bidding system’. The allegation was also rejected by CLB on Thursday.
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