Tech M, Mahindra Satyam merge

MUMBAI, INDIA: Tech Mahindra and Mahindra Satyam, which merged today, will be headed by C P Gurnani. The name of the merged entity is yet to be announced.

The merger will result in combined revenues of approx $2.4 billion along with over 350 active clients across 54 countries.

“I have not been able to see any other candidate than CP Gurnani to head the company so far,” said Vineet Nayyar, Vice Chairman and Managing Director of Tech Mahindra and Chairman of Mahindra Satyam at the press conference to announce the merger details of the company.

“There will be some changes. As far as sales and delivery are concerned there is zero overlap so in that segment there will be no change. But in areas like HR, legal, Finance and resource management there will be some structural alignment,” said C P Gurnani.

Mahindra Satyam, the erstwhile Satyam Computers that was taken over by the Mahindra Group, merged with Tech Mahindra with a share swap ratio of 8.5:1.

The Hyderabad-based Satyam Computers was put up for auction after its founder chairman B. Ramalinga Raju admitted to perpetrating a $1.5 billion fraud, bringing the company to the brink of a collapse.

"The exchange ratio recommended by the valuers and approved by the boards is two shares of Tech Mahindra (face value of Rs.10 each), for every 17 shares of Mahindra Satyam (face value of Rs.2 each)," the companies said in a joint statement on the regulatory filing.

Mahindra Group will own 26.3 per cent in the combined entry and British Telecom 12.8 per cent, while 10.4 per cent will be held as treasury stock.

The public shareholders of Mahindra Satyam will hold 34.4 per cent and the balance 16.1 per cent will be held by public shareholders of Tech Mahindra.

Tech Mahindra will issue 10.34 crore new shares thereby increasing its outstanding shares to 23.08 crore and its equity capital to Rs.230.8 crore.

"This merger will help propel the combined entity into the top tier of Indian software and services companies, achieving the group's key objective of being in a leadership role in each of our focus business areas," Anand G. Mahindra, Tech Mahindra chairman, said.

Following the merger, the revenues would be well balanced with a diversified global footprint that would boast of contribution from Americas at 42 per cent, Europe at 35 per cent and emerging markets at 23 per cent.