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Mahindra Satyam said it had approval from the Company Law Board to preferentially allot new shares to Tech Mahindra, after a poor response to a public offer to shareholders.

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Satyam said it would issue 198.66 million new shares to Venturebay Consultants Pvt Ltd, a unit of Tech Mahindra, at 58 rupees each, taking the latter's stake to 43 percent of the share capital.

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Tech Mahindra bought a 31 percent stake in Satyam Computer Services for about $351 million at an auction in April, after Satyam had been hit an accounting scandal, and launched a public offer to buy up to 20 percent in the open market at 58 rupees a share.

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However, only 420,915 Satyam shares were tendered to the offer, less than 0.1 percent of the outstanding shares, due to a recent spike in the share price of the renamed Mahindra Satyam.

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Shares in Mahindra Satyam closed 1 percent lower at 70.45 rupees, in a Mumbai market that fell 2.8 percent.

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