Mahindra Satyam – Tech Mahindra merger plan; stock surges

Stocks

oi-Monika

By Monika Nihalani

Published: Tuesday, December 20, 2011, 16:25 [IST]

The scrip of Mahindra Satyam advanced on the Bombay Stock Exchange (BSE) after the news floated by Economic Times (ET) on Tuesday that the two wings of Mahindra & Mahindra (M&M) – Mahindra Satyam and Tech Mahindra are close to appointing merchant bankers and accounting firms to value the two businesses for an eventual merger.

The merger of two biggies will lead M&M group's software business to a sixth position after TCS, Infosys, Cognizant, Wipro and HCL Technologies.

ET also reported that both accountants and merchant bankers hired for the merger process, will arrive at a valuation after estimating the share valuation of the two entities individually. The valuation will determine the share swap ratio for both the firms listed on BSE and NSE.

Top officials of the companies told ET that the fair valuation will be done by two large well-known accounting firms and two reputed international investment bankers.

They also added that the 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 2,500 crore and another is a claim from closely held companies of Mahindra Satyam's former chairman Raju's extended family for around Rs 1,200 crore.

These are pending issues which will be considered while arriving at fair valuation, said official.

At 12:30 pm IST, the scrip of Mahindra Satyam was seen up by 3.32% at Rs 65.30. The scrip touched an intraday high of Rs 68.10.

GoodReturns.in