Hyderabad: IT major Tech Mahindra on Tuesday said a board meeting will be held tomorrow to consider Mahindra Satyam's merger with itself.
   
Mahindra Satyam, erstwhile Satyam Computer Services, in a separate filing with BSE also said that the amalgamation will be considered in a board meeting tomorrow.
   
"Meeting of the Board of Directors of the Company will be held on March 21, 2012...to consider the Amalgamation of Satyam Computer Services Ltd (Mahindra Satyam) with the company...with a view to consolidate the information technology/software and related businesses and to form a single entity providing services in this sector," Tech Mahindra said in a filing with the BSE.

Tech Mahindra took over reins of the company in April, 2009 and rebranded it as Mahindra Satyam.
   
Shares of TechM closed at Rs 645.35 up 5.13 percent over previous close and shares of Satyam closed at Rs 74.15 up 4.66 percent.

The merger process will take 6-9 months, a senior official of Mahindra Satyam had said earlier.
   
"Hopefully, as I have said, by October we should have both the companies close to the merger," Mahindra Satyam Chairman Vineet Nayyar had said in a earlier press conference.
   
According to market analysts, the board will also decide the swap ratios for shareholders tomorrow in the meeting.
   
"The issues will be ratified in the shareholders meeting and the High Courts of Andhra Pradesh and Bombay have to give their consent for the amalgamation," Satish Kanteti of Zen Securities said.
   
As most issues such as SEC delisting, class action suites in USA and Upaid Systems have been resolved, amalgamation may not face any troubles, Kanteti said.
   
"We retain our view that investors should buy in to Mahindra Satyam and Tech Mahindra yielding the same stake in both companies. The combined entity would be the fifth largest
India listed IT services companies and would have annual revenues of USD 2.5 billion," Spark Capital said in its recent report.
   
Promoters held 70.9 percent in Tech Mahindra, followed DIIs with 5.22 percent stake, FIIs held 4.92 percent and others controlled 8.96 percent as per latest shareholding data.
   
In Mahindra Satyam, promoters held 42.65 per cent, FIIs and DIIs held 17.13 and 4.15 percent, respectively, while others held 36.07 percent.

"If the final share swap ratio is close to 9:1, then the current Mahindra Satyam shareholders will hold about 51 percent in the combined entity and Tech Mahindra shareholders will hold about 49 percent," SMC Global Securities Strategist & Research Head Jagannadham Thunuguntla said in Mumbai.
   
"However, any swap ratio in favour of Tech Mahindra may prove to be slightly better for the Mahindra Group."
   
The two firms will also consider the amalgamation of some of their wholly-owned units like Venturbay Consultants, C&S System Technologies, CanvasM Technologies and Mahindra Logisoft Business Solutions, official statements said.
   
Thunuguntla said the market will keenly watch nuances of the merger structure and swap ratio between Mahindra Satyam and Tech Mahindra.
   
"It needs to be seen what course of action will be adopted by the company in their merger planning. It may be any of the following methods - Tech Mahindra buying Mahindra Satyam or Mahindra Satyam buying Tech Mahindra, or even a merger between Tech Mahindra and Mahindra Satyam."
   
Taking several factors into account, the most likely method they may adopt appears to be the option of Tech Mahindra buying Mahindra Satyam, he said.
   
"It needs to be seen what kind of base will be used by the companies to arrive at the final swap ratio. On the basis of their current market prices, the likely swap ratio appears to be close to 9:1, that is, one share of Tech Mahindra will be issued for every nine shares of Mahindra Satyam."
   
Thunuguntla said British Telecom, a Tech Mahindra promoter, will closely watch this event as they hold about 23.20 percent stake in Tech Mahindra.
   
"If the swap ratio is 9:1, British Telecom will hold about 11.44 percent stake in the combined entity," he said.

(Agencies)