Following US-based iGate Corp's decision not to proceed into the next stage of the bidding process for a 51 per cent controlling state in Satyam Computer Services, iGate CEO Phaneesh Murthy has said that Satyam's share price would have had no bearing on his company's offer price. He also acknowledged that widespread apprehensions in the industry on customer exits played a partial role in iGate withdrawing from the fray to acquire Satyam.
iGate had in a statement on Friday evening said that it had dropped its bid for Satyam on 'further analysis'.
Clarfying his stand last week that iGate would be keen to bid for Satyam at an offer price of below 90 cents a share, Murthy said, "Had we decided to pursue the bid, the share price would have had no bearing on our offer price as we would have bid at a price we thought was a fair valuation."
Satyam's share price ended down 1.24 per cent on Friday at Rs 43.95 (87 cents), putting the market valuation of the company at roughly Rs 3,000 crore (Rs 30 billion). But a more realistic appraisal is still a difficult proposition given the lack of clarity on the company's earnings, a few high-profile customer exits and any future liabilities which can arise.
Murthy said that iGate's private equity fund partner with whom it planned a joint bid, had not influenced the decision to pull out.
"While the value erosion and extent of liabilities (of Satyam) were a concern it was the totality of concerns and not any one, single concern that influenced our decision.
These include sliding revenues, unknown margins, and large liabilities," Murthy said. An iGate spokesperson added that in all fairness to others in the race, the company wouldn't be able to get into details.
Murthy did not respond to a query on the possibility of a largescale customer exodus from Satyam, though he added that through market intelligence, his company had received indications that there are more customers exits happening at Satyam.
Through the thick fog of uncertainty facing the company, Satyam is still viewed as an attractive takeover target with companies like Nestle, National Australia Bank, General Electric, Qantas and oil mining technology giant Schlumberger on its client roster.
Other potential suitors for Satyam who registered last week, including engineering firm Larsen & Toubro, Tech Mahindra and B K Modi-led Spice Group, submitted their expressions of interest for Satyam on Friday.
L&T holds 12 per cent in Satyam and is considered a clear favourite in the race for the scam-ridden Hyderabad-based company.
The bidders were asked last week to show availability of at least $300 million to support their EoIs. The Satyam board, which met on Saturday, is looking at holding another meeting on Tuesday to discuss the EoIs, a reliable source confirmed.
Like iGate, the other bidders in the fray have been wary of Satyam's liabilities and possible outgoes resulting from the Upaid case and other class action lawsuits which Satyam faces in the US.