Spice chairman offers Rs20b for controlling stake in Satyam

Bangalore: Spice Corp. Chairman B.K. Modi offered Rs20 billion (Dh1,497 million) for a controlling stake in Satyam Computer Services Ltd, joining Larsen & Toubro Ltd in the race for the fraud-hit software exporter.

Spice Innovation, Modi's closely held New Delhi-based holding company, made a preliminary cash offer for preference shares in Hyderabad-based Satyam, Modi said in a telephone interview from New Delhi on Friday.

Satyam hired Goldman Sachs Group Inc. to find a buyer this week after Larsen, the nation's biggest engineering company, tripled its stake and said other bidders are interested.

Satyam shares have declined 70 per cent since founder Ramalinga Raju said January 7 he had inflated assets by $1 billion and quit as chairman.

"Anybody and everybody would have some or the other plan for Satyam because it is in big-time trouble and available at dirt-cheap valuations," said Harshad Deshpande, a Mumbai-based analyst at Ambit Capital Pvt. "What is important is they need to provide right leadership, they need to have genuine interest."

Modi may use part of the Rs21 billion he earned by selling his stake in Spice Communications Ltd. to Idea Cellular Ltd. last year to finance an offer for India's fourth-biggest software provider.

Larsen Chairman A.M. Naik has said Larsen may lift its holding in Satyam to 15 per cent, the threshold for an offer to investors under Indian takeover rules.

Satyam gained 7.8 per cent to close at Rs53.85 in Mumbai trading. The benchmark Sensitive Index added 2 per cent. Spice has sent its expression of interest to buy Satyam to the board and the government, Modi said. The purchase, if approved, will align with his group's interests in the information and communication businesses, he said.

"The key thing is that the money must go into the company," Modi said. The Rs20 billion is the amount Satyam needs to run its operations and "we have the money," he said.

Satyam's board said on January 27 it had organised money to pay salaries for January and was set to complete funding arrangements for meeting the cash-strapped company's immediate needs.

The software company, which is being investigated by India's fraud office, auditing body, markets regulator and police, also faces US class-action lawsuits after Raju admitted to inflating earnings for "several years."

Modi said he plans to change Satyam's brand name if he succeeds in acquiring the company and said Spice was familiar with regulations in the markets where Satyam operated and was prepared to deal with any legal action the provider may face.