L&T ups Satyam stake, fuels M&A talks
The Larsen & Toubro Group is believed to have extended its purchases of Satyam Computer shares from the secondary market on Wednesday, taking advantage of the plunge in the stock triggered by the accounting fraud revelation. The engineering major is believed to have hiked its stake in the tainted software entity to roughly 3.5-4% on Wednesday, from 2% last week.
Though L&T officials declined to comment on the matter, people familiar with the development said the possibility of a “strategic reason†for the stake purchases could not be ruled out, given the company’s existing interests in the software sector through its subsidiary L&T Infotech. Interestingly, L&T Capital, another L&T subsidiary, has been approached by Maytas Infra for buying out the promoter’s stake. However, the group is yet to take a call.
“As of now, it is just a portfolio investment, but the possibility of L&T looking to buy a strategic stake cannot be completely ruled out,†said a person close to the development. “Either way, it’s a win-win for L&T. If another company decides to buy Satyam, it will benefit the portfolio purchases. But if L&T decides to acquire Satyam, it will have a strategic fit for L&T Infotech at a cheaper price.
It is believed that Satyam could be a good buy for L&T Infotech at this juncture in terms of business prospects.
“Even if half of Satyam’s clients decide to part ways, the remaining client base would be good enough for L&T Infotech,†said another person familiar with the matter. “Bringing in a good management like L&T itself can come as a relief to Satyam clients.â€
Talks that regulator Sebi could resort to ‘extraordinary measures’ to assuage investor fears immediately, given the negative implications of this issue on foreign investments in the country, further fuelled the takeover speculation.