Satyam Computer Services did not consult Mendu Rammohan Rao, dean of the Indian School of Business and an independent director on the board of India's fourth largest IT services provider, when it called off the deal to acquire Maytas Infra and Maytas Properties following shareholder protests. Rao had chaired the board meeting that endorsed the company's proposal to buy the two firms linked to the family of Satyam's founder and chairman B Ramalinga Raju.
However, when it came to calling it off, he said: "I was informed later. I got a mail and I endorsed it."
Rao said market's reaction to the deal was on the mind of the board.
"Ok, we said we will take the risk. We did not anticipate that the market would react like this," he said disclosing what had happened at the board meeting. Satyam's board, said Rao, felt there would not be much growth in software now.
So the company needed to diversify, of which infrastructure was one option. The board endorsed the deal as the valuation of the two Maytas companies done by "one of the big four global accounting firms" was higher than the Rs 7,680 crore (Rs 76.80 billion) for which Satyam proposed to acquire them.
"We were told that it is not required by the law," Rao said when asked why the board did not insist on obtaining shareholder consent to the deal.