Satyam’s acquisition of Maytas has invited strong reactions from the market and its shareholders. But Satyam is decided on its decision and justifies the diversification stratergy employed by Satyam.

Speaking at a concall, Satyam Chairman and Founder B. Ramalinga Raju, said the move is driven by a need to adopt diversification strategy. He said the current business event is challenging; thus, Satyam needs to diversify the business model for drawing success. He feels that in the recent times it is difficult to make a strategic deal with other IT companies.

Key takeaways from Satyam conference concall on acquisition of Maytas Infra & Maytas Properties

Satyam says:

Once acquisiton happens will be able to add value and liberate the Satyam brand

Current business environment is challenging

Driven by a need to adopt diversification strategy

Maytas Infra hit by economic slowdown like other companies

This is definitely a non-conventional move

Valuation Of Maytas Infra is based on SEBI’s guidance

Maytas Properties has land bank of 6,800 acres; land in and around Hyderabad, Chennai, Visag and others

Need to integrate organisation to deal with uncertainties in the market

Value addition of acquisition will be felt in 2-3 years

Mytas proprerties PAT is almost 20-25%

EPS level - dilution only for the first year

2nd year on EPS is expected to improve

Doesn’t require shareholders permission

$1.3 bn will will go to the promoters of the Maytas Prop and not company

Maytas Prop valuation done by big 4 firms, will not disclose the name of firms

In case of Mytas infra - the magins will be dilutive

Any incremental debt will not have impact on the financial

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