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A marriage made in heaven

Zafar Anjum | March 23, 2012
Post-merger, we will be more aggressive in AP, says Rohit Gandhi, Mahindra Satyam’s managing director for the Asia Pacific.

Rohit Gandhi

Rohit Gandhi, Mahindra Satyam's managing director for the Asia Pacific

On 21 March, the long-awaited merger of Tech Mahindra and Mahindra Satyam was announced. Mahindra Satyam chairman Vineet Nayyar called the merger a "marriage made in heaven". And with that, the ghosts of Satyam's past were laid to rest.

As is well known, more than three years ago when Indian outsourcer Satyam was hit by a financial scandal, the company was rescued by Tech Mahindra in a government-managed acquisition.

Tech Mahindra said in a filing to the Bombay Stock Exchange on 21 March that its board has approved the amalgamation of its subsidiaries with the company, including wholly-owned unit Venturbay Consultants which acquired a 43 percent stake in Satyam in 2009.

For first official reactions on the merger, I spoke to Rohit Gandhi, Mahindra Satyam's managing director for the Asia Pacific. He was in Australia that day.

When I asked him how he felt about the merger, he expressed his sense of joy. "The good part is that we have done it (the merger) under three years of the acquisition," he said. "Overall, it is very heartening."

Just after the announcement, the Indian stock market showed some positive gains for the Tech Mahindra shares. It was still early in the day. I asked Rohit if he was tracking the market. No, he said, he was not. But he did speak to some of his clients in Australia and he received positive feedback from them.

The shares of both companies closed about 5 percent higher on Bombay Stock Exchange that day.

Timing of the announcement

Last year, when I had spoken to Satyam officials, the impression that was given was that the merger would be announced by mid-year or later. But it happened a bit early. Still, not many were taken by surprise. The merger of the two companies was always the intended end game. Just like C. P. Gurnani, the CEO of Mahindra Satyam, said on the day of the announcement: "The Mahindra Satyam turnaround is a shining story of determination and grit and now comes to its most important chapter, with this merger."

Now that the merger has been announced, the actual amalgamation of the two companies' operations will take a while to take effect. The proposed merger is subject to court approvals (courts in Andhra Pradesh and Maharashtra), and clearances from shareholders, lenders and creditors. "The legal formalities will still take some time," said Rohit. "The good part is that the merger has been announced. The swap value, exchange ratio, etc., has all been approved. So to that extent, it has become a reality. With that, now we can go and take all the necessary approvals. Once that is done, then you are up and running (as a merged entity)."

 

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