In a bid to protect it’s portfolio investment, engineering giant Larsen and Toubro has decided to throw it’s hat into the ring to acquire the troubled Satyam Computer Services, and is looking to other institutional shareholders like LIC and ICICI Pru Life Insurance to support it’s revival plan.

According to the shareholding pattern in December, LIC holds 4.34 per cent in Satyam and ICICI Pru 2.87%. L&T had picked up a 4.48% stake from the open market in December and has seen a devastating erosion in it’s stake value after Raju’s confession. Not only that, it’s own share price has been hammered down recently.

L&T’s software arm L&T Infotech sees a lot of synergy with Satyam due to it’s presence in the ERP solutions business. Satyam is the 4th largest SAP integrator after Accenture, IBM and Capgemini. However, L&T could face some opposition from HCL Technologies, also said to be eyeing Satyam for the same reason. 

On Friday, L&T picked up and additional 7.6% equity (5.8% on NSE and 1.8% on BSE) through an open market purchase, taking it’s stake in Satyam to almost 12%. The Satyam scrip closed the day at Rs.38.85. If L&T’s stake reaches the 15% mark, it will trigger an open offer for an additional 20% stake in Satyam as per Sebi’s takeover guidelines. The catch here is that in case of an open offer, the offer price will be based on the average price for the past six months, which will be pretty expensive for L&T.

L&T is apparently in discussions with the market regulator to relax this open offer clause given the extenuating circumstances. Let’s see what happens in the coming week.

 

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