The Board of Directors of Mahindra Satyam has decided to merge the company with Tech Mahindra Limited (TML).
In a statement to the Bombay Stock Exchange Mahindra Satyam said, "All assets and liabilities of the company will be transferred to and vested in Tech Mahindra at book values."
The swap ratio has been decided at 2:17, which means that Mahindra Satyam shareholders will get two shares of Tech Mahindra for every 17 shares they hold. The swap ratio is the ratio in which an acquiring company will offer its own shares in exchange for the target company's shares during a merger or acquisition.
"The swap ratio is in-line with yesterday's closing price and 2 weeks and 6 months average. It is a fair swap ratio for the two stocks. I don't see any immediate reaction on the two stocks," Hitesh Shah, Director (Research) at IDFC Securities told NDTV Profit.
Shares of Tech Mahindra surged after the announcement was made. At 0940 hours, Tech Mahindra stocks rose over 4.5% on the BSE at Rs 679. Shares of Mahindra Satyam traded 2% higher at Rs 75.65. The BSE Sensex was down 0.1% or 15 points at 17,301.
20.4 crore shares (17.4% Stake) of Mahindra Satyam will be transferred to TML beneficiary. Tech Mahindra will issue 7.93 crore shares to remaining 56% holders in Satyam.
JP Morgan was the banker to the deal.
Tech Mahindra had acquired the scam-hit Satyam Computer Services in 2009 and re-branded it as Mahindra Satyam with the eventual goal of merging the two firms.
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