Phaneesh Murthy, CEO of the Freemont (California)-based IT services provider, iGate Corporation, flip-flopped twice before his company officially filed an expression of interest to acquire the troubled Satyam Computer Services.
The reason, according to the ex-head of global sales & marketing of Infosys Technologies, is lack of availability of Satyam's financials. He feels there is significant value erosion in the company.
In India, powered with the support of a $5.5 billion US-based PE fund, Murthy tells Bibhu Ranjan Mishra why his company is "one of the best-equipped in the race" to buy Satyam.
Excerpts:
Are you a serious suitor for Satyam, given the statements you made earlier?
I had expressed an interest earlier (a couple of months ago) but the delay in the process, as well as the fact that the new financials were not going to be made available, were reasons my interest waned. I had always maintained that the new/latest financials were an important piece of information for me to take a call on going forward.
Last week, we learnt that a process had been laid out whereby the financials would be disclosed. This is what prompted us to file the expression of interest. Based on the financials, we will take a call on the way forward.
However, I continue to believe there is significant value erosion at Satyam.
Given your understanding of Satyam's financials and client base, what kind of price would you be ready to pay them?
The decision would depend on the new set of financial numbers. We still do not know the extent of liabilities. I am hoping we will be able to take a call on this once we have studied and analysed the new financials that are likely to be shared with us (It may be lower than even the prevailing market price, reports Reuters).
What could be a fair valuation for Satyam?
It will be lower than the current market price. How much lower will depend on the extent of value erosion and the liabilities. We will be in a better position to throw light on this once we have studied the new financials and understood the latest set of numbers.
How do you plan to raise money for the acquisition?
We have partnered with a $5.5 billion US PE fund, which will bring in the required money. Clearly, for us, money is not an issue. Value erosion and the extent of liabilities are more of a concern.
How are you placed when compared to other Indian suitors like L&T, Spice or Tech Mahindra, who already have the requisite cash to support the acquisition?
I do believe that we are one of the best equipped in this race, given the fact that we undertook several transformations at iGate in the past few years and turned it around from a loss-making firm to a profitable company.
How does Satyam fit into iGate's plans?
It will give us the scale. This will make us stronger and catapult us into a different league.
Are you back to India to facilitate the bidding process?
No, this is part of my normal visit.
