Satyam Computer Services Ltd. (fka SAYCY)

[califax]

Satyam jumps as L&T says may raise stake

...'Somebody is going to jump into the fray. Once what we know becomes more clear and once others come to know, the price will move,' he added.

http://www.finanznachrichten.de/nachrichten-2009-01/12940646-update-1-satyam-jumps-as-l-t-says-may-raise-stake-020.htm

27.01.2009 09:57
UPDATE 1-Satyam jumps as L&T says may raise stake

By Janaki Krishnan

MUMBAI, Jan 27 (Reuters) - Shares in fraud-scarred Satyam Computer Services Ltd (News) jumped more than 28 percent on Tuesday after engineer Larsen&Toubro (News) said it may raise its stake in the outsourcing firm beyond 12 percent.

'We don't rule out moving from 12 to 15 percent,' L&T Chairman A.M. Naik told an analysts call, adding it would first wait for more clarity on Satyam's financial position.

Larsen&Toubro, India's biggest engineering and construction firm, valued at around $7.7 billion, trebled its Satyam stake on Friday after speaking to some of the software services exporter's customers and on hopes the government would help rescue the firm, Naik said.

Satyam has been struggling for survival since Jan. 7 when founder Ramalinga Raju resigned as chairman revealing profits had been overstated for years and $1 billion in cash on the books did not exist.

'I have been in touch with every single leader you can think of in this whole transaction ... at the board that exists now, at the government level ... because this company is under very close monitoring by the government,' Naik said.

'We have got a good report on Satyam's services,' he added. 'We have been constantly encouraged by the government that this is the company they would like to save.'

Satyam's six-member board, appointed by the government after the country's largest corporate fraud, was meeting in the southern city of Hyderabad to discuss L&T's expanded stake, how to secure funding to pay salaries and bills, and a shortlist for the posts of chief executive and chief financial officer.

L&T had previously held a 4 percent stake in Satyam -- whose global clients include General Electric, Nestle and Caterpillar Inc -- before Raju's stunning revelations of years of accounting fraud.

Naik, who hopes to use Satyam to expand L&T's small outsourcing unit, said that by raising its holding in Satyam, L&T had cut its average acquisition cost to about 80 rupees a share from 174 rupees.

'We have taken into our calculation that there will be value erosion up to a point before stabilisation of confidence,' he said. 'Even if we don't acquire, there may be a counter bid.

'Somebody is going to jump into the fray. Once what we know becomes more clear and once others come to know, the price will move,' he added.

Second and third tier companies such as L&T Infotech have to consolidate, Naik said, adding that Infotech would grow by as much as the industry's best this year and reach $500 million in revenue.

Satyam shares, which have slumped by three-quarters since the disclosures, were up 20 percent at 46.70 rupees by 0822 GMT, while L&T lost 1.2 percent. The main stock index gained 2.9 percent. Satyam stock was dropped from the benchmark index on Jan. 12.

Raju, the company's former managing director and the chief financial officer are in police custody in Hyderabad, and police said at the weekend they arrested two partners at Satyam's auditors, PricewaterhouseCoopers.

(Writing by Narayanan Somasundaram; Editing by Ranjit Gangadharan and Ian Geoghegan) Keywords: SATYAM/

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