Strategic Review and Delayed Board Meeting
Satyam Computer Services has engaged the services of investment bank DSP Merrill Lynch to undertake a comprehensive review of its 'strategic options to enhance shareholder value.' This move is widely interpreted as a signal that the Indian outsourcer is exploring possibilities for either being acquired or selling a substantial stake to an external investor.
Rescheduling of Board Meeting
Concurrently with the announcement of DSP Merrill Lynch's engagement, Satyam Computer Services postponed a scheduled board of directors meeting from its original date to January 10. The meeting, initially intended to discuss and finalize plans for a share buyback, will now be held in the new year.
Agenda for January 10 Meeting
On January 10, Satyam's board will convene to:
- Announce recommendations on the available strategic options for the company
- Review the implications of selling shares held by the company's largest shareholders
- Outline steps to enhance corporate governance, a pressing concern in light of recent developments
Corporate Governance and World Bank Announcement
The issue of corporate governance has gained heightened attention following the World Bank's announcement that Satyam Computer Services will be excluded from future contracts. The bank's decision was based on findings that Satyam provided 'improper benefits' to World Bank employees and failed to adequately document fees paid to subcontractors. While Satyam demanded an apology from the World Bank, it did not contest the allegations.
Investor Criticism and Previous Expansion Plans
Corporate governance has also been a point of contention among investors, particularly in response to Satyam's plans to diversify into property and infrastructure. Notably, on December 16, Satyam announced intentions to acquire Matyas Property and secure a controlling stake in Matyas Infrastructure, companies in which Satyam's founders hold significant interests, with the deal valued at US$1.6 billion. However, the company swiftly recanted on these plans the following day, citing negative feedback from the investor community.