PE investor Wilbur Ross and infrastructure major Larsen & Toubro (L&T) may jointly bid for a controlling stake in the fraud-hit Satyam Computer Services…Source
Market news says that L&T & Ross' firm, WL Ross & Co, signed a preliminary agreement last week. Ross will be the financial partner and L&T will handle the daily operations of the Hyderabad-based software company.
The two companies are looking to offer Rs 2,000 crore for a minimum 51% stake in Satyam, and if successful, will invest another Rs 2,000 crore to revive the firm. L&T will contribute 51% or more to the stake buy, with Ross bringing in the rest of the funding.
In the past Ross, showed interested in buying Satyam, had been seen fronting for IBM and Cognizant. L&T, however, shared its report on Satyam with the PE major after conducting the due diligence as part of the bidding process. The infrastructure giant, which has 12.04% holding in Satyam, has Rs 4,550 crore cash to pursue the acquisition.
I feel the Satyam bracket would fall into L&T basket.
Why L&T?
L&T Infotech
Reverse merger or takeover will provide back door entry to the stock exchange
Reverse merger will bring down long and complex procedure of listing
During tough environment, globally, financially sound companies take the reverse merger route to list
For the last three years, L&T Infotech has been trying to list on the bourses
Will save 1-2% of IPO expenses
Operational synergies
Scale up business to almost four times the current size
Post acquisition of Satyam, it will become $2.65 billion from the $400 million currently
Vertical Synergies
Consolidate its strength in manufacturing through Satyam’s ERP practice
L&T Infotech derives 34% of manufacturing vertical, Satyam nearly 24%
Forrester says Satyam frittered away advantage of SAP practice due to fraud
Nearly 42-43% of Satyam’s revenue derives from ERP practice
Satyam’s ERP practice and L&T’s manufacturing focus will increase billing rate significantly
Exposure to financial service vertical through Satyam. L&T has been striving this for long
Post scandal, Satyam employees in ERP verticals are the only ones in high demand
Expertise in ERP solution would be a useful springboard of growth
About L&T Infotech
Set up 1997, over 10,000 employees
Contributes nearly 6.3% to L&T’s consolidated profit and loss account
Caters to clients like Hitachi, Lafarge, Chevron and BPCL.
Market news says that L&T & Ross' firm, WL Ross & Co, signed a preliminary agreement last week. Ross will be the financial partner and L&T will handle the daily operations of the Hyderabad-based software company.
The two companies are looking to offer Rs 2,000 crore for a minimum 51% stake in Satyam, and if successful, will invest another Rs 2,000 crore to revive the firm. L&T will contribute 51% or more to the stake buy, with Ross bringing in the rest of the funding.
In the past Ross, showed interested in buying Satyam, had been seen fronting for IBM and Cognizant. L&T, however, shared its report on Satyam with the PE major after conducting the due diligence as part of the bidding process. The infrastructure giant, which has 12.04% holding in Satyam, has Rs 4,550 crore cash to pursue the acquisition.
I feel the Satyam bracket would fall into L&T basket.
Why L&T?
L&T Infotech
Reverse merger or takeover will provide back door entry to the stock exchange
Reverse merger will bring down long and complex procedure of listing
During tough environment, globally, financially sound companies take the reverse merger route to list
For the last three years, L&T Infotech has been trying to list on the bourses
Will save 1-2% of IPO expenses
Operational synergies
Scale up business to almost four times the current size
Post acquisition of Satyam, it will become $2.65 billion from the $400 million currently
Vertical Synergies
Consolidate its strength in manufacturing through Satyam’s ERP practice
L&T Infotech derives 34% of manufacturing vertical, Satyam nearly 24%
Forrester says Satyam frittered away advantage of SAP practice due to fraud
Nearly 42-43% of Satyam’s revenue derives from ERP practice
Satyam’s ERP practice and L&T’s manufacturing focus will increase billing rate significantly
Exposure to financial service vertical through Satyam. L&T has been striving this for long
Post scandal, Satyam employees in ERP verticals are the only ones in high demand
Expertise in ERP solution would be a useful springboard of growth
About L&T Infotech
Set up 1997, over 10,000 employees
Contributes nearly 6.3% to L&T’s consolidated profit and loss account
Caters to clients like Hitachi, Lafarge, Chevron and BPCL.
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