BANGALORE, 9 MARCH 2009 - Indian outsourcing company Satyam Computer Services announced Monday (9 March) the start of a competitive bidding process that could lead to an investor acquiring a majority stake in the company.
Only a few selected bidders will have access to detailed financial data and other information about the company, and the information available is also likely to be limited as the company's accounts are being revised after a financial scandal at the company.
Interested bidders have to register their interest online with the company by 5.00 p.m., local time, on Thursday. They will then receive a request for proposal from the company and are asked to submit a detailed expression of interest by Friday.
Bidders will have to provide proof of access to at least 15 billion rupees (US$292 million) in funds.
Satyam said on Friday that it had received permission from the Indian regulator, Securities and Exchange Board of India (SEBI), to sell up to 51 percent of the company's equity in a global bid. While 31 percent of the stake will be offered by way of a preferential share offering, another 20 percent will have to be purchased in an open offer from other shareholders of the company, in line with Indian regulations.
Some companies who had shown interest in buying out Satyam said that they would bid only if information on the company's financials and the company's clients are made available to them.
Satyam's accounts are being restated following a statement in January by the company's founder, B. Ramalinga Raju, that its profits have been inflated for several years.
The company said on Monday that access to certain business, financial and legal diligence materials will be provided to bidders on the short list after they have executed several agreements, including a non-disclosure agreement.
After completion of the due diligence process, all short-listed bidders will be asked to submit their bids and an executed copy of the share subscription agreement, the company said.
The company did not list the procedure by which bidders will be short-listed, and did not specify what type of financial and business information will be released to bidders on the short list. A company spokeswoman said no further information on the bid process is available at this point, apart from the company statement.
The process for selecting a bidder will be overseen by a former chief justice of India or a former Supreme Court judge appointed by the company, Satyam said.
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