Satyam announces winning bidder

Satyam has announced that Tech Mahindra will acquire a controlling stake in the firm

Scandal-hit IT services giant Satyam announced today that fellow Indian outsourcing firm Tech Mahindra has won the battle for a controlling stake in the company, after it was judged the highest bidder.

Tech Mahindra, a mid-tier Indian outsourcing firm and the IT arm of congolomerate Mahindra & Mahindra, will have to pay around $600m (£403m) to gain a controlling stake in troubled Satyam, according to reports.

"The selection of the highest bidder, in a fair, open and transparent process, signals a new stage for the company in its progress towards stabilisation and growth," said Kiran Karnik, chairman of the Satyam board.

"We hope this will infuse greater confidence and comfort among 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."

Satyam was rumoured to be in acquisition talks with IBM in March before the firm was hit by a massive accounting scandal.

The Indian government last week finally filed charges against nine individuals including Rama and Ramalinga Raju, co-founders of the company. Ramalinga Raju was serving as chairman when the £682m fraud was exposed in January.

He resigned after it emerged that he had been overstating the firm's profits for seven years, causing the share price to tumble.

The Indian outsourcing industry, as well as Satyam customers such as Nestlé and General Motors, will be hoping today's news heralds a new era of stability at the firm at a time when the outsourcing industry, like most others, is suffering from the global economic downturn.