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| Mahindra Satyam to meet on July 10 |
| Press Trust of India / New Delhi Jul 02, 2009, 20:49 IST |
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The board of Mahindra Satyam will meet on July 10 to discuss the second round of preferential share allotment to raise Tech Mahindra's stake in the firm to about 42.7 per cent.
"The board will meet on July 10. Tech Mahindra is expected to exercise its option to take its stake forward through a second preferential route... They may also decide to stay at their existing level of 31 per cent, it is their call," Kiran Karnik, chairman of the board of Mahindra Satyam, told PTI.
In April, Tech Mahindra acquired 31 per cent in Satyam for Rs 1,756 crore.
When asked about the lack of response from the shareholders to the open offer, he said, "It is a sign of strength of the company that the share price has moved from Rs 40-45 to Rs 73 since the first preferential option was exercised."
Tech Mahindra's open offer price was Rs 58 a share and analysts said the lower open offer price was (compared to the current price) the reason for the lack of response.
The Satyam stock touched its upper limit of 5 per cent to close at Rs 77.20 on the Bombay Stock Exchange today.
Earlier a Tech Mahindra spokesperson said due to a weak response to the open offer, "we will request the Mahindra Satyam board for the preferential allotment, which could take the stake of Tech Mahindra to 42.7 per cent in the Hyderabad-based company".
Karnik said once the board decides to go ahead with the offer, the second preferential issue should happen in the next 15 days and both the Company Law Board and Sebi's approval are needed for this.
Tech Mahindra's agreement with Satyam allows it to raise the stake through a second round of preferential allotment if the open offer fails to get a good response.
To buy more stake through the preferential issue, the company expects to spend the Rs 1,155 crore it had set aside for the open offer.
Had the open offer for 20 per cent been successful, Tech Mahindra would have acquired 51 per cent in Satyam. It will now have to spend more if it wants a majority holding since the preferential issue will expand the share capital.
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