Satyam Computers will acquiring 100% stake in Maytas properties for $1.3 billion and 51% stake in Maytas Infra for $300 million. Both the companies are in real estate sector. Maytas Infrastructure has the $4 bn Hyderabad metro project in its kitty. Maytas properties deals with urban infrastructure and Raju family owns 35%.
75% of acquisition (Maytas Infra + Maytas Properties) will be from Satyam’s cash reserves. 25% will be via debt.
51% stake in Maytas Infra will be acquired in two stages. Satyam will acquire 31% of promoters (mostly Raju family) stake in Maytas Infra at 475 rupees per share. Balance 20% would be acquired by a open offer for 525 rupees per share. The current market price of Maytas Infra is 486 rupees.
Satyam Shareholder pattern : Indian promoters – 8.75%, Institutional Investors – 61.22%, Other Investors – 21.29%, General Public – 8.75%. Here Raju family or the Indian promoters hold only a minority of the stock. Majority is held by FII’s and mutual funds. Their approval is critical for this deal to go through. (source)
Maytas Infrastructure Shareholder pattern : Indian Promoters – 36.64%, Institutional investors- 11.72%, Other Investors – 28.43%, General Public – 23.2%. Majority is held by Indian promoters which makes it easy for the acquisition.
I am a little confused here. Satyam a publicly listed software services company which has no debt and ~$1.6bn cash is buying two real estate companies. The two real estate companies are again promoted by Raju family. 35% of Maytas Properties is owned by Raju family and 36% of Maytas Infrastructure is held by Indian promoters who again are mostly from Raju family.
So, a major chunk of $1.3 bn would go to Raju family from Satyam Computers books?
The buyout will de-risk the core business by bootstrapping a new business vertical in infrastructure. – Press statement
The announcement came after Indian markets closed but the US markets did not spare Satyam stock. Fresh from the Madoff scam and the auto bailout failure, US markets did not need much of a bad news to dump this Indian stock. Satyam just helped their cause. Satyam is down 54% on NYSE when I checked at 10 PM IST.
There are lot of questions to be asked.
What kind of diversification is it anyway for a IT services company to buy a real estate company? Of the two sectors IT sector is doing better than a real estate company.
HCL-Axon deal makes sense as HCL is gaining new expertise in SAP area. Infosys with $1.6bn cash did not go through with the deal and was happy with the cash. Satyam for all the companies in the world picked up 2 real estate companies and running into debt? When did real estate become a hot sector?
Can someone explain what’s going on?
Update : As of 10:10 AM IST on 17th December 2008, the deal is called off by Satyam. Source : CNBC.