Tech Mahindra is paying $351 million for a 31% share of Satyam, and will follow this up with an open offer for a further 20% of the shares at the same price.
This values Satyam at $1.1 billion, just over half of its total reported revenues for the year ended March 2008. In any other circumstances this would be a bargain-basement price. However, clear details about Satyam\'s true financial position have yet to emerge four months on from the admission of fraud by its former chairman B. Ramalinga Raju.
Therefore we don\'t expect Tech Mahindra, or any of its competing bidders, would have had a clear view of the profitability and operating metrics of Satyam before placing a bid.
While Satyam maintains that the fraud is not as widely spread as first thought, audited accounts have yet to emerge, making the value attributed to this acquisition a real "