Tech Mahindra becomes 4th Largest IT Company in India overnight

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Tech Mahindra becomes the 4th largest IT company in India overnight by buying 51% share of Satyam Computer Services.

Tech Mahindra Ltd. won the bidding for control of Satyam Computer Services Ltd., the software exporter at the center of India’s biggest fraud inquiry, beating Wilbur Ross and Larsen & Toubro Ltd. with a $579 million offer.

Tech Mahindra, based in Pune, will pay 58 rupees a share for a 31 percent stake and acquire a further 20 percent from investors at the same price, Satyam said today. That’s about a tenth of Satyam’s one-year peak of 524.9 rupees on May 29. U.S. billionaire Ross offered 20 rupees and Larsen 45.9 rupees a share, Satyam Chairman Kiran Karnik said.

Tech Mahindra will gain control of a business serving Cisco Systems Inc. and Nestle SA, strengthening its ability to compete with larger rivals Tata Consultancy Services Ltd. and Infosys Technologies Ltd. The sale may restore investor confidence and stem client defections after former Chairman Ramalinga Raju said Jan. 7 he inflated assets by more than $1 billion.

“Tech Mahindra will benefit from this because with Satyam they will overnight become the fourth-largest IT firm in India,” said Diptarup Chakraborti, Mumbai-based principal analyst at researcher Gartner Inc. “It helps them diversify from the single line of service they have, and reduce their dependence on their largest client.”