BANGALORE (Reuters) – India’s Spice Group and Tech Mahindra (TEML.BO) said on Friday they were in the race for fraud-hit Satyam Computer Services (SATY.BO), but as a deadline passed U.S.-based iGate Corp (IGTE.O) said it would not proceed.
Other potential suitors who registered last week, such as engineering firm Larsen & Toubro (LART.BO), had not said whether they submitted their required expressions of interest in a 51 percent stake in the outsourcing firm by Friday evening.
A meeting on Friday of the government-appointed board of Satyam, at which the stake sale was expected to have been discussed, was extended into Saturday. A spokeswoman declined to comment on the agenda of the meeting.
New York-listed Satyam (SAY.N) has been struggling since founder and Chairman Ramalinga Raju shocked investors in January, saying profits had been overstated for years and assets falsified in what has become India’s biggest corporate scandal.
“Our bid price will depend on the kind of information we get and we will factor in the liabilities in the bid price,” Spice Group Chairman B.K. Modi said, referring to the legal liabilities arising from class action lawsuits filed in the United States.
Potential bidders who had registered last week were required to submit a detailed expression of interest and show availability of at least 15 billion rupees ($300 million) by 5 p.m. (1130 GMT) on Friday to stay in the race.
From these, the board has said it would shortlist candidates who would be given access to certain business, finance and legal materials before submitting a bid for the firm that was ranked as India’s fourth-largest outsourcer.
iGate said in a statement its decision not to pursue a bid followed further analysis of the Indian outsourcing firm.
A spokesman at Larsen & Toubro, which holds 12 percent stake in Satyam and is seen by many as a front-runner to acquire the troubled outsourcing firm, declined comment on its position.
Fitch Ratings said on Friday it had withdrawn its ratings of Tech Mahindra, citing uncertainties related to the possible acquisition of Satyam in terms of financing and consequent financial impact on the company.
Analysts have said Satyam looks attractive given the plunge in its share price and a long list of marquee clients, including General Electric (GE.N) and Qantas Airways (QAN.AX).
But bidders face a tough job in valuing the company due to uncertainty about its accounts and liabilities.
Satyam said last week Indian and foreign firms, including private equity companies, had registered to bid for a controlling stake but gave no details of names or number.
Shares in Satyam, which specialises in business software, ended down 1 percent on Friday at 43.90 rupees in a broader market .BSESN that fell 0.4 percent, valuing the company at about $585 million compared with $7 billion last May. ($1=50.6 rupees)
By Sumeet Chatterjee
(Additional reporting by Prashant Mehra and Janaki Krishnan in MUMBAI) (Editing by John Mair)