HYDERABAD/MUMBAI: Satyam Computer on Thursday attempted to reassure angry investors and jittery employees. While the markets were told that the company board would consider a share buyback, the staff were reassured of its commitment to the IT services business.
The move comes a day after it called off a controversial $1.6-billion deal to buy two firms, Maytas Properties and Maytas Infrastructure, run by the sons of Satyam founder-chairman B Ramalinga Raju. The proposal, if cleared by the Satyam board on December 29, could lead to a 1% hike in the promoter’s stake (currently at 8.5%), according to Rashesh Shah, chairman, Edelweiss Capital.
A company can buy back a maximum of 10% of its paid-up capital at one go, with the board’s approval. “Satyam is expected to use the permissible limit to the full extent,” Mr Shah said.
Meanwhile, the government is understood to have ordered a probe into Satyam Computers’ decision to buy the two companies and then reverse the deal within a few hours under pressure from investors. According to sources, the government will examine if the company had any malafide intention to influence the stock market.
Satyam may be “generous” in fixing the buy-back price, said a stock market analyst. Ram Maynampati, whole-time director of Satyam, however, said the probability of a hostile takeover of the company is “almost nil.” On Thursday, Mr Raju also sought to reassure 50,000 employees of the country’s fourth-largest software exporter of his commitment to the IT services business.
Satyam’s commitment to its core business came into question after it announced what it called a “diversification and de-risking strategy”, by acquiring a real estate company and an infrastructure provider.
In a letter addressed to employees, Mr Raju said, “I want to reassure you that Satyam remains fully committed to the IT services business and continues to reinforce its leadership position in this space.” He emphasised to the staff that the scuppered bid to buy companies run by his sons did not constitute a breach of corporate ethics.
“Please be assured that our intent to acquire Maytas was well within the framework, and not compromised in any way. We strongly believed that this move would yield significant value for our shareholders and contributed to the strength of the company,” the letter said.
“I share your disappointment that the recent developments have caused to us. We have always placed significant value on the interests of our associates, customers and investors. We are in conversation with many of our key stake-
holders individually to correct the perceptions.”
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