Mumbai, March 27: B.K. Modi’s Spice Corp today withdrew from the race to acquire Satyam Computer Services Ltd citing lack of transparency in the bidding process.
Spice Corp said the government-appointed board of the Hyderabad-based software giant was not following an open competitive auction route to select the strategic investor.
There were indications over the past couple of days that the group would withdraw from the race after Modi expressed annoyance over the fact that the bidding process wasn’t transparent.
However, Spice said it would re-enter the fray if Satyam provided the details that it had been demanding.
The Spice group has been insisting that the Satyam board should publicly disclose the identities of the bidders who have been shortlisted. Spice is one of the six bidders in the shortlist.
Some of the bidders have already undertaken a due diligence process under which they were able to pore over some of the financial data and legal documents provided by the fraud-scarred company.
The due diligence process will last till April 4. The financial bids are likely to be called by April 9.
Spice, however, did not commence the due diligence process as it wanted the Satyam board to first address its concerns. Reports say the group has written a letter to the Satyam board seeking an open auction process for Satyam and a public disclosure of the identities of the bidders.
Preeti Malhotra, executive director of Spice Innovative Technologies, told The Telegraph that the Company Law Board (CLB) had earlier ruled that a strategic investor should be inducted after devising a plan that was open and transparent. However, the bidding process adopted by Satyam did not meet the touchstones of transparency.
“The CLB had said clearly that a competitive, price bid auction process should be followed. However, instead of doing this, they are taking a second shortlist through closed financial bids and not following the open auction route,” Malhotra said. She added that Satyam should follow the same process that was adopted when Corus or Arcelor was acquired.
“Since Satyam is a publicly-listed company, openness and transparency is very important,” Malhotra said.
Spice has now written a letter to Justice S.P. Bharucha, who is overseeing the bidding process. It is understood that the group will take a final decision based on the response from him.
Satyam has said the successful bidder will be selected based on its financial bid and other technical criteria.
Corporate governance, a clean track record, management and organisational ability in operating a global company will be some of the technical criteria.
On Tuesday, Satyam had outlined how it intended to carry out the bidding process in a letter to the Securities and Exchange Board of India.
The highest bidder will win if there are no bidders that come up with a price that is less than 90 per cent of the highest bid.
If there are one or more bidders who are above the 90 per cent threshold, they will be allowed to participate in a second round along with the highest bidder.
The top bidder in the second round will be declared the winner. In the event of a tie, there will be a tiebreaker.
Maytas Infra
IL&FS Financial Services has acquired a 14.5 per cent stake in Maytas Infra, promoted by former Satyam chairman B. Ramalinga Raju’s kin, through invocation of pledge and off-market transactions.
In a disclosure to the Bombay Stock Exchange, Maytas Infra said IL&FS had acquired 56.53 lakh shares representing a 9.61 per cent stake in the company following invocation of pledge.
In a separate filing to the National Stock Exchange, Maytas Infra said IL&FS had also acquired 28,79,999 shares representing 4.89 per cent in the company through an off-market transfer.
IL&FS had acquired 28.79 lakh shares of Maytas Infra on March 26 by way of off-market transfer from Investsmart Financial Services Ltd, the filing said. Following the transfer, IL&FS’s holding in Maytas Infra has gone up to 14.5 per cent.
As on December 31, Sicom Ltd held 6.97 per cent, while Citigroup Global Markets (Mauritius) held 1.70 per cent in Maytas Infra.
Shares of Maytas Infra closed at Rs 34.55, up 1.47 per cent on the BSE.
Spice Corp said the government-appointed board of the Hyderabad-based software giant was not following an open competitive auction route to select the strategic investor.
There were indications over the past couple of days that the group would withdraw from the race after Modi expressed annoyance over the fact that the bidding process wasn’t transparent.
However, Spice said it would re-enter the fray if Satyam provided the details that it had been demanding.
The Spice group has been insisting that the Satyam board should publicly disclose the identities of the bidders who have been shortlisted. Spice is one of the six bidders in the shortlist.
Some of the bidders have already undertaken a due diligence process under which they were able to pore over some of the financial data and legal documents provided by the fraud-scarred company.
The due diligence process will last till April 4. The financial bids are likely to be called by April 9.
Spice, however, did not commence the due diligence process as it wanted the Satyam board to first address its concerns. Reports say the group has written a letter to the Satyam board seeking an open auction process for Satyam and a public disclosure of the identities of the bidders.
Preeti Malhotra, executive director of Spice Innovative Technologies, told The Telegraph that the Company Law Board (CLB) had earlier ruled that a strategic investor should be inducted after devising a plan that was open and transparent. However, the bidding process adopted by Satyam did not meet the touchstones of transparency.
“The CLB had said clearly that a competitive, price bid auction process should be followed. However, instead of doing this, they are taking a second shortlist through closed financial bids and not following the open auction route,” Malhotra said. She added that Satyam should follow the same process that was adopted when Corus or Arcelor was acquired.
“Since Satyam is a publicly-listed company, openness and transparency is very important,” Malhotra said.
Spice has now written a letter to Justice S.P. Bharucha, who is overseeing the bidding process. It is understood that the group will take a final decision based on the response from him.
Satyam has said the successful bidder will be selected based on its financial bid and other technical criteria.
Corporate governance, a clean track record, management and organisational ability in operating a global company will be some of the technical criteria.
On Tuesday, Satyam had outlined how it intended to carry out the bidding process in a letter to the Securities and Exchange Board of India.
The highest bidder will win if there are no bidders that come up with a price that is less than 90 per cent of the highest bid.
If there are one or more bidders who are above the 90 per cent threshold, they will be allowed to participate in a second round along with the highest bidder.
The top bidder in the second round will be declared the winner. In the event of a tie, there will be a tiebreaker.
Maytas Infra
IL&FS Financial Services has acquired a 14.5 per cent stake in Maytas Infra, promoted by former Satyam chairman B. Ramalinga Raju’s kin, through invocation of pledge and off-market transactions.
In a disclosure to the Bombay Stock Exchange, Maytas Infra said IL&FS had acquired 56.53 lakh shares representing a 9.61 per cent stake in the company following invocation of pledge.
In a separate filing to the National Stock Exchange, Maytas Infra said IL&FS had also acquired 28,79,999 shares representing 4.89 per cent in the company through an off-market transfer.
IL&FS had acquired 28.79 lakh shares of Maytas Infra on March 26 by way of off-market transfer from Investsmart Financial Services Ltd, the filing said. Following the transfer, IL&FS’s holding in Maytas Infra has gone up to 14.5 per cent.
As on December 31, Sicom Ltd held 6.97 per cent, while Citigroup Global Markets (Mauritius) held 1.70 per cent in Maytas Infra.
Shares of Maytas Infra closed at Rs 34.55, up 1.47 per cent on the BSE.
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