India Inc intrigued by L&T stake hike in Satyam
The company has forked out close to Rs 640 crore for the 12 per cent
stake.
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'The share buy would make sense for L&T as it is keen to grow its IT base
beyond its tech arm, L&T Infotech.'
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Our Bureau
Mumbai, Jan. 24 Larsen & Toubro (L&T) literally set the cat among the pigeons
on Friday when it decided to increase its stake in Satyam Computer Services to
12 per cent. The move surprised India Inc and rattled other interested suitors.
While L&T paid Rs 460 crore for the initial four per cent buy, the second round
to treble its stake was far less expensive at Rs 176 crore. All in all, the
company has forked out close to Rs 640 crore for 12 per cent in Satyam.
The move has been described as "audacious" and "desperate" within corporate
circles, with sources maintaining that L&T is merely keen to make good the
hefty outgo for the initial four per cent which had caught its top management
off guard.
It was on the following day that Satyam's ex-chairman, Mr Ramalinga Raju, made
his sensational disclosures which sent the scrip plummeting and eroded the L&T
investment to a sixth of its figure.
As more skeletons started tumbling out of the Satyam closet, it was only a grim
reminder to L&T that its carefully planned script of buying into Satyam had
gone horribly wrong.
Speculation is now rife that the L&T Board, including its non-executive
directors, will discuss this issue in greater detail on January 30 when the
third quarter results are tabled.
"The hefty payout for the initial four per cent still rankles. Stakeholders
would now like to know if the bulk deals on Friday were only intended to
balance out the figure or if L&T is really serious about acquiring Satyam,"
sources said.
Keen on growth
>From the company's point of view, the acquisition makes sense because it is
>keen on growing its IT base beyond what its technology arm, L&T Infotech, has
>achieved so far. Satyam gives it access to infrastructure, clients and some of
>the best brains in terms of the 40,000 employees.
L&T's Chairman and Managing Director, Mr A.M. Naik, could not be accessed on
his cell phone for comments. "This is a sensitive issue and the company
officials would rather keep their cards close to their chest," top sources told
Business Line.
On Friday, the management had gone on record to drive home the point that this
was a move intended to safeguard L&T's interests. It seemed a strong message to
other suitors but not many people in India Inc are buying this story. "Each day
is bringing out more sordid revelations. Why not wait till the investigation is
complete? What happens if the Satyam scrip falls further?" they asked.
Experts say that it is equally likely that potential suitors for Satyam have a
better update of the company's financials and know what the ownership
implications are.
Would L&T look at mopping up three per cent more stock and go in for an open
offer? Would it be content with 12 per cent and watch the rest of the Satyam
story unfold? Answers will become clear in the coming days.
http://www.thehindubusinessline.com/2009/01/25/stories/2009012551070100.htm
ekamber
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