MSat-TechM share swap: Audit ordered

Tags: News
In a development that could delay the merger of Mahindra Satyam (Satyam Computer Services) with Tech Mahindra (TechM), the Andhra Pradesh High Court Thursday directed appointment of an independent auditor to seek an opinion on the swap ratio.

Boards of both the companies had last year agreed to swap two TechM shares of Rs 10 each for every 17 MSat shares.

However, the minority shareholders of Satyam, who are said to hold between 15 to 20 per cent shares, have been opposing the sawp ratio and have been demanding a better deal. They contended that they have invested in the company shares at a higher value and the share swap ratio should take this into account. They have moved the court in this regard.

The share holders have been contending the basis of determining the share swap ratio and said that not all recommendations for establishing the swap ratio have been followed.The court was dealing with a petition filed by minority shareholders. The counsel argued that the swap matter was complex for the officer of the Official Liquidator and would require an independent auditor to look into the matter.

The court's decision for an independent auditor comes at a time when all other necessary approvals for the merger are in place including a nod from capital markets regulator Sebi, Competition Commission of India, stock exchanges and even the Maharashtra High Court.

The minority shareholders Satyam at many a fora have questioned why the management choose to apply only three of the four valuation methods recommended by the appointed consultants. They said the management was selling its view that the MSat was sick for the outside world but presenting to the valuers a rosy and healthy picture of the company.

An independent audit at this point of time would have far grater ramifications than just delaying the merger process. For instance, the ED has slapped an attachment notice on MSat for recovery of Rs 882 crore from the company. The ED said these were the monies were proceeds of crime.

Satyam founder B Ramalinga Raju himself had then claimed he had pumped in about Rs 1,230 crore in the company.

If the independent audit proves the existence of these monies, the company has to honour the attachment order. On the otherhand, the company has been saying that there was no money in it when it acquired and had to borrow about Rs 500 crore for salaries and other overheads.

When contacted, the company spokesperson said the company had no comment to offer at this point of time.

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