Satyam Computer Services, India’s fourth-largest IT services provider, today said its board has approved the purchase of 51 per cent in Maytas Infra and buy out of Maytas Properties. The outflow for the deals would total around Rs 7,680 crore.

Family members of Satyam Chairman Ramalinga Raju sit on the boards of both these companies. Rama Raju Jr. is one of the key promoters of Maytas Properties, which develops urban infrastructure, and has been on its board since 2005.

B Teja Raju, the elder son of Ramalinga Raju, is the vice chairman of Maytas Infra — a listed company which is engaged in infrastructure construction and asset development and employs over 3,000 people. For the second quarter ended September 30, 2008, the company registered a net profit of Rs 17 crore on a turnover of Rs 354 crore.

Satyam will acquire 100 per cent stake of Maytas Properties for $1.3 billion (around Rs 6,240 crore) and $0.3 billion (Rs 1,440 crore) for the 51 per cent stake in Maytas Infra.

Currently, Satyam has $1.15 billion (around Rs 5,500 crore) in cash and equivalents. It proposes to acquire 31 per cent in Maytas Infra from the promoters at a price of Rs 475 a share and make an open offer for additional 20 per cent since the company is listed on the domestic stock exchange. The open offer price has been approved at Rs 525 a share and is subject to change in line with Sebi guidance.

Ramalinga Raju, chairman and founder, Satyam, said: “This would de-risk the core business by bootstrapping a new business vertical in infrastructure. This market segment can mitigate the risk attributes to developed markets and traditional verticals that are likely to get impacted by the recessionary economy.”

Analysts, however, are not elated with the news. Many analysts tracking Satyam are trying to understand the logic of the acquisition, and are wondering “if the shareholder money is being put to good use in a downturn”.

source: BusinessStandard

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