Tech Mahindra-Satyam Deal Clears Regulatory Hurdle - InformationWeek

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IT Leadership // IT Strategy

Tech Mahindra-Satyam Deal Clears Regulatory Hurdle

Competition watchdogs in Germany have signed off on the proposed merger.

Germany's BundesKartellamt, or Federal Cartels Office, this week approved Tech Mahindra's proposed $422 million buyout of scandal-scarred Indian outsourcer Satyam, bringing the deal a step closer to completion.

The deal must now obtain regulatory approval in the United States and other markets where the two companies conduct a significant share of business. Approval, however, is viewed by most as a formality as Tech Mahindra's business is mostly limited to the telecom sector while Satyam serves a broad base of industries.

In a note published on its Web site, the BundesKartellamt simply noted that it had "released" the transaction from its review process.

The integration of Satyam and Tech Mahindra is also moving forward on other fronts.

Executives from Tech Mahindra said Monday that they planned to operate Satyam as a standalone enterprise headed by its current leadership once their deal to acquire a 51% stake in the company closes.

Still up for discussion is a range of key issues. Integration plans, a possible reduction in Satyam's 50,000-employee head count, and facilities consolidation are some of the matters that Tech Mahindra will need to address as it proceeds with the takeover.

The fate of Satyam's tainted brand name also is on the table. Tech Mahindra, a relative unknown outside the telecom outsourcing arena, may want to keep the brand in order to maintain some name recognition among potential customers. On the other hand, the Satyam brand is now forever associated with one of the biggest financial frauds in India's history.

Earlier this week, Tech Mahindra deposited into escrow $351 million to secure the purchase agreement. The company is backed by Indian manufacturing giant Mahindra & Mahindra and British Telecom.

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