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back to article Satyam investors blow roof off building firm takeover bid

IT services giant Satyam has abandoned the takeover of two Indian building groups after investors reacted with horror to the proposal. Satyam shares fell over 30 per cent on the Indian stock exchange and more than 50 per cent in New York after it said it would pay $1.6bn for 100 per cent of Maytas Properties, which develops …

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  1. Jonathan Morton

    Did anyone else notice...

    ...that Maytas and Satyam are also reversals of each others' names?

    No wonder the investors smell a rat.

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  2. amanfromMars Silver badge

    Indian? Spin Merchants playing Silly Buggers?

    "Part of the problem with the deal was that, despite claims from Satyam that it followed exacting corporate governance rules, Raju's sons have senior posts in both firms - Rama Raju Jnr is vice chairman of Maytas Properties and B Teja Raju is vice chairman of Maytas Infra."

    That part of the problem is easily fixed with them resigning so it is probably some markets interference from worried competitiors stirring up the dissent.

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  3. Anonymous Coward
    Unhappy

    Indians...

    "Raju's sons have senior posts in both firms - Rama Raju Jnr is vice chairman of Maytas Properties and B Teja Raju is vice chairman of Maytas Infra"

    When Indian companies realise this is unacceptable, they can compare themselves with the best of the Western companies. You'd never see IBM behaving in such a way - why did it take an investor revolt to bring the senior execs to their senses ? The CEO of Satyam should resign over this.

    amanfromMars - IMHO resignation of the sons should have happened before the deal was even conceived !

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  4. Sitaram Chamarty

    satyam and maytas

    @Jonathan Morton: the name Maytas was chosen to be a reversal of Satyam, the original name of the entire group, a long time ago. There have also been articles praising the sons of Satyam chief for going into the traditional family business (real estate/construction; they were in it long before the software thing came along) rather than join their dad in IT.

    This has nothing to do with why investors smelt rats on this episode.

    The problem is that the family owns 8% of Satyam, but at least 35-36% (some say as much as 80%!!) in the 2 Maytas companies. This means wealth flows out of the shareholders pockets into the Raju family's pockets.

    The second issue is that the valuation of 1.6 billion USD was just below the amount of 1.64 billion which was the mandated limit on how much they could spend without shareholder approval (this limit is mandated by the Companies Act or something like that and there's some way to compute that based on your market cap and some other stuff I don't remember and can't be bothered to look up)

    The contention here is that the valuation is too close to the limit to be a coincidence.

    It also appears they're not saying who did the valuation, which is another issue.

    @Indians (AC @18th dec 15:01 GMT)

    The US does not have a "family" culture for these things, so this is not a fair comparision. And your broad-brush implication about "Indian companies" is pretty silly -- would you prefer American style, as exemplified by the sort of stuff that's been coming out of the woodwork these past few months?

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