Three directors of Satyam Computer Services, India's fourth largest IT company, have quit after the failed acquisition attempts and the IT major drawing a sanction from the World Bank. The three directors - Krishna Palepu, Vinod Dham and Mendu Rammohan Rao - have resigned from the board without officially giving any reason. This news comes in as investment bankers are said to be approaching IT players and private equity funds for a possible buyout of Satyam. Private equity funds like KKR, Carlyle, and TPG have been reported to be interested in a buyout of Satyam.
Satyam is becoming an ideal target for corporate raiders as the valuation of the company have declined and institutional investors seem to be losing faith in the management. Global IT service majors IBM, Accenture and Cap Gemini could also be potential bidders for Satyam.
Earlier on December 25 academician Mangalam Srinivasan resigned as an independent board member. Dham, who is known as the father of Pentium chip, is also executive manging director of $190 million venture fund NEA-Indo US Ventures. Mendu Rammohan Rao, who is said to have chaired the board meet that approved acquisition on December 16, is the dean of Indian School of Business. Palepu is also an academician, and is a professor at Harvard Business School.
On December 16, the board of Satyam approved acquisition of Maytas Infrastrcuture and Properties, which were owned by the promoters, for around $2 billion. The move would have meant expansion into an unrelated business area of infrastructure and real estate development.
Satyam has postponed its board meeting which was to be held on December 29 to January 10, 2009. It has said that the management in its next meeting will "consider to increase the size and alter the composition of the board, while effecting a change in the governance structure of the company."
Satyam has also announced appointment of DSP Merrill Lynch as a merchant banker to review and suggest a plan to increase shareholder value. After its shareholder value saw an erosion of 40% in its market capitalisation, the share price of Satyam increased by 9.4% at close of markets yesterday.
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