Satyam, Tech Mahindra to consider merger tomorrow

The boards of Satyam Computer Services Ltd and Tech Mahindra Ltd, IT services providers part of the Mahindra group, will meet on Wednesday to consider a merger, the companies said on Tuesday in separate statements.

Billionaire Anand Mahindra purchased Satyam in a government-sponsored sale in 2009 after the founder of the Hyderabad-based software services provider admitted to one of the largest accounting frauds in India.

Mahindra is seeking to create a consolidated IT services powerhouse by merging Satyam and Tech Mahindra, which provide software services to clients mostly in the United States and Europe.

Satyam, now re-branded Mahindra Satyam, reported a better-than-expected fiscal third-quarter profit on February 1.

Satyam shares rose 4.7% to Rs 74.15 at close of Mumbai trading in a market that gained 0.25%. Tech Mahindra shares added 4.9% at Rs 648.7.

The two companies will also consider the amalgamation of some of their wholly-owned subsidiaries - Venturbay Consultants Private Ltd, C&S System Technologies Private Ltd, CanvasM Technologies Ltd and Mahindra Logisoft Business Solutions Ltd - the statements said.