3 reasons why Tech Mahindra - Satyam buyout makes sense

By Aditya Mhatre at 13 April, 2009, 10:01 am

Finally, after 3 months and 6 people behind bars, Bidding for Satyam ended and Tech Mahindra won the race. Tech Mahindra offered Rs 58 per share (total - Rs.1756 crores) for a 31% stake in Satyam. It’s not very often that a buy out of this maginitude makes so much sense. Here are a few reason why I think this is good news to all stake holders.

Access to new industry verticals: Tech Mahindra has been carrying the burden from its previous life when it was known as the Mahindra- British Telecom (MBT). It has a strong presence in the Telecom sector and had found it tough to expand into other vertical. The Satyam buy out opens up all the other industries that Tech Mahindra found difficult to break into. Satyam was also known for its ERP capabilities which I believe Tech Mahindra might have lacked for the simple reason that Telecom companies have very minimal ERP requirements apart from may be Payroll. This is good news for the shareholders
No duplication of jobs roles: One of the things that happen post buy out or merger is cutting employees with duplicate roles but I dont foresee that happeneing because Satyam employees will bring in epertise required for verticals that Tech Mahindra didn’t have. This is good for the employees.
Good Corporate brand: One of the things that Mahindra brings in is its corporate reputation. I know of a very senior consultant who calls them the medium sized Tata Group. Mahindra group is known to have a good corporate culture and professional ethics which is one things that Satyam needs the most. This is good news for the clients who were once (and rightly so) questioning the companies operations.

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Categories : Technology