AP high court okays Mahindra Satyam merger with Tech Mahindra

Boards of both companies had already proposed a swap ratio of 2:17 (for every 17 shares held in Mahindra Satyam, shareholders will get two shares in Tech Mahindra)

The Andhra Pradesh High Court on Tuesday gave its go-ahead for the merger of consulting and IT services provider Mahindra Satyam (formerly Satyam Computer Services Limited) with its parent Tech Mahindra.

“The high court, while giving its verdict on the merger process, imposed a condition that we (management) should not interfere in the ongoing investigations on Satyam, and extend support towards the same,” a Mahindra Satyam spokesperson told Business Standard.

C P Gurnani, who is now spearheading both the companies –– as additional director and managing director of Tech Mahindra and chief executive officer (CEO) of Mahindra Satyam –– has already been designated as the CEO of the combined entity.

The boards of both the companies had already proposed a swap ratio of 2:17 (for every 17 shares held in Mahindra Satyam, shareholders will get two shares in Tech Mahindra).

Once merged, the combined entity is expected to become the country’s fifth largest software exporter with a total headcount of around 80,000 and annual revenues of $2.4 billion, next to Tata Consultancy Services, Infosys, Wipro and HCL.

“The High Court of Andhra Pradesh has approved the scheme of amalgamation and arrangement of Venturbay Consultants Private Limited, Satyam Computer Services Limited, C&S System Technologies Private Limited, CanvasM Technologies Limited and Mahindra Logisoft Business Solutions Limited with the company (Tech Mahindra),” Mahindra Satyam said in a filing to the BSE today.

It may be recalled that the Bombay High Court had, on September 28, 2012, approved the merger proposal, subject to receipt of a requisite approval from the Andhra Pradesh High Court.

Earlier on June 10, 2012, both the companies had convened extraordinary general meetings (AGMs) as per the order of the AP high court to consider the merger process. Both the Bombay Stock Exchange (BSE) and the National Stock Exchange, and competition watchdog Competition Commission of India  had already given their approvals for the proposed merger.

Tech Mahindra, through its subsidiary Venturbay Consultants, took over the scam-hit Satyam in April 2009 and rebranded it as Mahindra Satyam after Satyam’s founder and chairman B Ramalinga Raju had admitted to a multi-crore accounting fraud in January 2009.

Mahindra Satyam’s scrip ended the trade at Rs 111.05 on the BSE on Tuesday, up  4.17%, over the previous close of Rs 106.60 a share.