HP and CSC in running to buy Satyam

Hewlett-Packard and Computer Sciences Corporation (CSC) are in the mix regarding the acquisition of troubled Indian IT supplier Satyam, according to reports.

Hewlett-Packard and Computer Sciences Corporation (CSC) are in the mix regarding the acquisition of troubled Indian IT supplier Satyam, according to reports.

The bidding process for the company started today, with applications of interest requested to be in by Thursday 12 March. The company then requires more detailed expressions of interest and proof from bidders of available funds to the value of $290m by 20 March.

Former chairman B Ramalinga Raju admitted that he had falsely reported the company's results. This left the company short of cash and its customers short of confidence.

Western companies such as IBM have already been tipped to be potential buyers of Satyam.

IBM already has a significant presence in India, which helps it compete with offshore firms in terms of delivery capability. An acquisition such as Satyam would help HP compete with IBM. HP has already bought IT services provider EDS.

There is also interest from Indian firms such as Hinduja Group and telecoms giant Tech Mahindra as well as engineering and construction company Larsen & Toubro, which is already a shareholder.

Robert Morgan, consultant at Hamilton Bailey, said Satyam would probably go to another Indian firm because they are familiar with how Satyam is run. "The Indian companies will take it on trust because they are owned by families, rather than shareholders."

He added believes Western firms will be put off by the fraud and its possible repercussions. "I cannot see an IBM or any other global supplier taking it seriously. I think they would like to buy Satyam, but the possibility of action from shareholders will stop any Western company buying it."

Mark Lewis partner and head of outsourcing at law firm Berwin Leighton Paisner, said whichever company acquires Satyam, whether Indian or not, will face the same legal threats. "There are already two legal claims against Satyam by shareholders." He said the company that buys Satryam may have to ringfence good business from liabilities."

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