Mahindra Satyam (up 2.93% to Rs 65.05) and Tech Mahindra (up 0.72% to Rs 574.10), edged higher.
The BSE Sensex was down 33.56 points or 0.22% at 15,345.78.
Mahindra Satyam had underperformed the market over the past one month until 19 December 2011, falling 10.23% compared with the Sensex's 6.06% decline. The scrip had, however, outperformed the market in past one quarter, falling 7.06% as against 8.16% fall in the Sensex.
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Tech Mahindra had outperformed the market over the past one month until 19 December 2011, falling 4.87% compared with the Sensex's 6.06% decline. The scrip had, however, underperformed the market in past one quarter, sliding 10.40% as against 8.16% fall in the Sensex.
According to a report, Mahindra Satyam and Tech Mahindra, controlled by the Mahindra & Mahindra (M&M) group, are close to appointing merchant bankers and accounting firms to value the two businesses for an eventual merger.
The merger will reportedly enable the M&M group's technology business to become the sixth biggest software service exporter after TCS, Infosys, Cognizant, Wipro and HCL Technologies. The combined entity is expected to have revenues of $2 billion, report added.
Report suggested that while accountants hired for the merger process will arrive at a valuation, merchant bankers will help in estimating the share valuation of the two firms to determine the share swap ratio for the firms listed on Indian stock exchanges.
However, the report also added that the merger process may not be a smooth affair as two pending hurdles could pose a material impact on the valuation. One is an income tax claim of about Rs 2500 crore, while the other pertains to a claim from closely held companies of Mahindra Satyam's former chairman Ramalinga Raju's extended family for around Rs 1200 crore. These companies claim they gave money to Satyam before the fraud came to light. The merger will also considerably prune Tech Mahindra's exposure to British Telecom, an important client cum shareholder, report added.
M&M group acquired Mahindra Satyam, erstwhile Satyam Computer Services, in 2009 when its former chairman Ramalinga Raju admitted to an accounting fraud, estimated to be worth more than $1.5 billion. The change of guard was carried out through a bidding process executed by the government.
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