Satyam – spotlight!

After several pitfalls, today a news report emerged stating that, Tech Mahindra is planning to merge with Satyam. This news propelled both the stocks between 7 to 10 percent. Though, Satyam rubbed off the report during the mid-day, Tech Mahindra denied only after the market hours. This has become a common routine in the stock market, whenever a company fails, rumors/reports propels the share price. Earlier, news floated around that HCL, Cognizant, Mindtree are considering a merger.

Below are the series of events that made Satyam to be in the spotlight:

• FOX news reported that Satyam Computer Services was barred by World Bank in doing any business, which was reportedly imposed from Feb 2008. This is effective for next Eight years. According to Fox, Satyam was responsible for financial wrong doing and data stealing. Though, analysts say that it may be highly exaggerated.
• Satyam announced the $1.6 billion acquisition of Maytas Infra and Maytas properties (Real-Estate firms) owned by the founders and family members ( Satyam spelled backwards is ‘Maytas’). Further, it stated that, it doesn’t need shareholders' approval as the acquisition is a good strategy! However shareholders dumped the stock to its low, which forced the founders to pull pack their decision in nine hours.
• Brokerages issued aggressive ‘sell’ calls on Satyam’s stock, which worsened the situation. The shareholders lost confidence on the board, wondering on how the board allowed the acquisition. If so, is the board really independent?
• Amidst the big setbacks, Satyam’s old client Upadi system filed a lawsuit in the Texas count against the acquisition of Maytas Infrastructure Ltd.
• Meanwhile, World Bank blamed Satyam “for providing improper benefits to the bank staff and for failing to maintain documentation to support fees charged for its subcontractors.”
• Satyam demanded an apology from World Bank for damaging its name, which ofcourse was not accepted by World Bank.
• Dampening Satyam’s business, International research firm Forrester issued a report that Satyam’s clients should review their contract if the management issues are not resolved in the next nine months.
• Satyam’s Independent director Dr.Mangalam Srinivasan resigned from the board.
• Despite the Management’s request, Satyam’s employees(including senior management) started looking out for other opportunities.
• Now, in the news for multiple mergers reports with various Indian and International IT firms.

More: Satyam Update.

Read: What went wrong at the 'deal'
The other side: World Bank corruption