Larson In Talks w/ PE Firms for Satyam Bid

MUMBAI (Reuters) – Indian engineering conglomerate Larsen & Toubro (LART.BO) is talking to private equity firms such as Blackstone (BX.N) and The Carlyle Group to jointly bid for Satyam Computer Services (SATY.BO), the Economic Times reported on Tuesday.

Goldman Sachs (GS.N), Kohlberg Kravis Roberts & Co [KKR.UL] and Singapore’s Temasek [TEM.UL] are also involved in the discussions with L&T, the newspaper said, citing unnamed people familiar with the situation.

“This is purely speculative,” a spokesman for Larsen told Reuters, without elaborating.

The Economic Times said Goldman Sachs — one of the firms appointed by Satyam’s board to help find an investor — and KKR were also evaluating the option of making individual bids.

L&T, which owns 12 percent of Satyam, is among a clutch of firms that have expressed interest in the outsourcer damaged by India’s biggest corporate fraud. Satyam’s founder Ramalinga Raju quit in January saying profits had been overstated for years and assets falsified.

New York-listed Satyam said on Friday that Indian and international firms, including private equity companies, had registered to bid for a controlling stake. [ID:nBOM344496]

U.S. outsourcer iGate Corp (IGTE.O) has tied up with a private equity firm to bid for Satyam, whose government-appointed board is looking for an investor to help restore confidence among both clients and staff. [ID:nBOM478691]

Software services firm Tech Mahindra (TEML.BO) and diversified Spice Group are among those registered as potential bidders, who must submit detailed expressions of interest by Friday.

CONTRACT TERMINATION

Separately, the Economic Times said around 46 customers of Satyam had moved their outsourcing contracts to rival firms such as Tata Consultancy Services (TCS.BO), Wipro (WIPR.BO), IBM (IBM.N) and Accenture (ACN.N) since the fraud was uncovered.

Clients such as Applied Materials Inc (AMAT.O), Telstra Corp (TLS.AX), Nissan Motor Co Ltd (7201.T) and Sony Corp (6758.T) had either moved out their projects or were in the process of shifting to other outsourcers, the paper reported, quoting a person familiar with the developments.

A Satyam spokeswoman told Reuters the company would not comment on client specific issues.

A Nissan spokeswoman in Tokyo said the automaker’s North American unit continues to do business with Satyam and has no plans at the moment to terminate its contract with the Indian outsourcer.

Satyam won a multi-million dollar deal in 2006 to manage Nissan’s business applications for the North American market.

A Sony spokesman in Tokyo declined to comment on the report, while a Telstra spokesman said decisions about arrangements with IT services providers would not be announced to the media by Australia’s largest phone company.

By Janaki Krishnan and Prashant Mehra

(Additional reporting by Sumeet Chatterjee in BANGALORE; Chang-Ran Kim and Sachi Izumi in TOKYO; Denny Thomas in SYDNEY; Editing by Ranjit Gangadharan and Lincoln Feast)