Open offer gets poor response, preferential allotment to follow
On the conclusion of the mandatory open offer to shareholders of Satyam Computers, the new owner, Tech Mahindra, has a little over 42 per cent stake in the company, as against the original plan of acquiring a total of 51 per cent of the equity.
The response to the open offer for 20 per cent of Satyam shares — TM had earlier bought 31 per cent by outbidding others — was poor, as the secondary market price was well above Rs 70 per share during the period of open offer (between June 12 and July 1), where the price laid down was Rs 58 per share. “In the offer, the company received very little shares, actually less than one of the company’s (Satyam) paid-up capital,” sources said on the condition of anonymity. On Wednesday, Satyam’s share price closed at Rs 71.55.
Satyam is going to issue fresh shares within a week of closure of the open offer, a source said. This was part of the original purchase condition, that if the successful bidder for the 31 per cent didn’t get enough to make it up to 51 per cent through the open offer, there was be a preferential allotment.
Originally, Tech Mahindra had acquired 302.76 million shares, equivalent to 31 per cent of the expanded equity capital, for Rs 1,756 crore. In addition it had given an open offer for 199 million shares, equivalent to 20 per cent of the equity capital of Satyam, under the takeover code, for Rs 1154.7 crore, resulting in total acquisition cost of Rs 2910.7 crore.
That money will now be infused into the troubled company, strengthening the balance sheet.