Tech Mahindra Likely Buyer Of Satyam

Scandal-plagued Satyam has likely found a buyer: Tech Mahindra. Stocks of both tech companies rose on the news, with Tech Mahindra increasing 12.3 percent and Satyam rising 3.6 percent.

Tech Mahindra had its best close in almost six months as the deal could vault the No. 6 midsize outsourcer into the top tier of local software services firms. The IT firm was the highest bidder for a controlling stake in the outsourcing firm. In the deal, Tech Mahindra has agreed to purchase 31 percent of Satyam's shares, resulting in an infusion of $351 million (U.S.) into the beleaguered Indian outsourcing firm. According to Satyam, there "was no bid within at least 90 percent" of Tech Mahindra's.

It has been three months since B. Ramalinga Raju, former chairman of Satyam Computer Services, confessed to a $1 billion fraud. Last week, India's Central Bureau of Investigation (CBI) filed charges for "criminal conspiracy, cheating, and forgery and falsification of accounts and for causing disappearance of evidence" against Raju, his brother Rama Raju, Chief Financial Officer Srinivas Vadlamani, and two Price Waterhouse auditors.

Although the charges begin the litigation of the case, a purchase would help the company pursue new business on a more stable footing.

"The selection of the highest bidder, in a fair, open and transparent process, signals a new stage for the company in its progress towards stabilization and growth," said Kiran Karnik, the chairman of the board, in a statement. "We hope this will infuse greater confidence and comfort amongst customers, who continue to be happy with Satyam's excellent service delivery. This event ought to dispel the anxiety of all stakeholders as it repositions the company's commitment to revival and good governance."