The Andhra Pradesh High Court on Tuesday gave its approval to the proposed merger of Mahindra Satyam with Tech Mahindra, paving the way for the creation of India’s fifth-largest IT firm. The approval comes after a year-long wait as the board of Mahindra Satyam announced the merger in March 2012.
Mahindra Satyam and Tech Mahindra, along with their subsidiaries, have a combined revenue of about $2.5 billion. Following the merger, the combined entity hopes to double its revenues to $5 billion by 2015, backed by joint go-to-market strategies. CP Gurnani has already been designated as the CEO of the combined entity that will have over 80,000 employees.
Justice NRL Nageswara Rao, while dismissing petitions seeking directives for stalling the merger, said the investigation into the alleged fraud committed by Satyam Computer?s former Chairman B Ramalinga Raju and others would continue. The high court also imposed the condition that the management should not interfere with the ongoing investigations in the Satyam case.
In all, Justice Rao dismissed petitions filed by 35 entities, including those from the family members of Ramalinga Raju, two entities owned by engineering and construction firm IL&FS and also minority shareholders who had opposed the merger.
?We are pleased with the decision of the court… the next step will be to formally conclude the integration process and accelerate our focus…? a company spokesperson said.
Mahindra Satyam will hold its AGM on July 31 to deliberate on various issues, including board-level changes and other branding issues. With this, the company has received all necessary approvals for the merger, including approvals from Sebi, the Competition Commission of India, stock exchanges and the Bombay High Court.
The Raju family and IL&FS had sought a refund of R1,230 crore that they claimed to have given to Satyam before the scam came to light in January 2009. Separately, the minority shareholders had objected to the merger ratio, alleging that Mahindra Group had fixed the swap ratio in its favour.?The AP High Court then appointed an auditor to scrutinise the restated accounts of Satyam and the merger scheme. The auditor gave a clean chit and the merger was okayed.
The new management at Satyam had classified the said R1,230 crore as ?amounts pending investigation suspense account? on the advice of the Enforcement Directorate, which is investigating the fraud.?A lawyer representing the lenders said they would contest the orders of before the division bench. “We want the R1,230 crore to reflect as liabilities of Satyam and they should be passed onto Tech Mahindra so that the rights of all the stakeholders, including the creditors are protected,” the lawyer added.
