Satyam Takeover : L&T hikes stake in Satyam hinting a takeover

Larsen and Turbo (L&T) and LIC of India are probably two biggest institutional investors in Satyam computers. Since details of Satyam scam - from fraud in manipulating profits by 10times to diverting about Rs. 75 billion by various ways like creating 'fake employees' - the shares in Satyam have suffered a huge drop in price.

Perhaps, if you still hold a stake in Satyam, the best thing you can hope for is a possible take over of Satyam. There have been talks about a possible takeover, but no confirmed news yet. Recently L&T has hiked its stake in Satyam by 12% and the only likely reason seems to be an anticipation of a takeover.

I think even in the case of a takeover, it will take Satyam quite some time to regain its glory (most of which was overhyped by deliberate faulty accounting) as clients will probably move away to other reliable IT companies. US Farms has already announced that it will not deal with Satyam anymore. World bank has already blacklisted Satyam, so no more direct contracts from the world bank. Nevertheless, any confirmed takeover news may result in some positive movement in Satyam's stock price.

Jan 23, 2009

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