Engineering giant Larsen and Toubro (L&T) is selling a third of its 6.9 per cent stake in Mahindra Satyam, formerly Satyam Computer Services. The transaction is expected to fetch Rs 304 crore (Rs 3.04 billion) for the company, said banking sources.
"L&T opened the book on Thursday after the trading hours and the transaction will be completed by Wednesday morning. The first transaction, at Rs 112.50 a share, is at a 4.21 per cent discount to the market price," said sources. Nomura is believed to be the sole bookrunner.
L&T has 81.13 million shares of the 1.17 billion equity of Mahindra Satyam. At Thursday's closing price of Rs 117.45, L&T's holding in Mahindra Satyam is valued at Rs 950 crore (Rs 9.5 billlion).
The company bought the shares in two transactions earlier, for Rs 665 crore (Rs 6.65 billion), on an average of Rs 82 a share. It could book a profit before tax of about Rs 285 crore (Rs 2.85 billion) if it sells all the shares at Thursday's price.
On April 13, L&T, one of the suitors for Satyam Computer, had lost in the bid for a controlling stake in the scam-tainted company to Tech Mahindra, a Mahindra & Mahindra group company.
By the Satyam sale conditions, bidders were barred from selling their stakes for six months, as they were privy to Satyam's financial information, which was not made public at that time.
Three months before, after Satyam revealed the financial figures ahead of an open offer by Tech Mahindra, L&T sought the market regulator's permission for an early sales of its stake. The company did not, however, pursue the matter, since the lock-in period for holding the shares was nearing.
"L&T was looking to buy assets in the information technology space to grow its subsidiary, L&T Infotech. The proceeds could be used for acquisition. Since the market has recovered partly, this is the time to sell and book profit," said a Mumbai-based analyst.
L&T first bought 4 per cent in Satyam for around Rs 380 crore (Rs 3.8 billion) through its wholly owned subsidiary, L&T Capital, in early January. The company had spent around Rs 170 a share.
Two or three weeks after founder-head Ramalinga Raju's revelations that Satyam's accounts had been overstated for several years, L&T bought 8 per cent, when the share price fluctuated between Rs 29 and Rs 39.
With this, the average cost of shares in L&T's kitty fell to Rs 82 and the stake went up to 12.04 per cent. After the open offer following the Tech Mahindra win, Satyam's capital base expanded and L&T's stake went down to 6.9 per cent.
