BANGALORE - India's Tech Mahindra said on Monday it would still look to boost its stake in Mahindra Satyam through a purchase of new shares direct from Satyam, after a public offer received a poor response.
Tech Mahindra took a 31 percent stake in Satyam Computer Services in April for around $360 million, after the company was hit by financial reporting scandal, and launched a public offer to buy up to 20 percent in the open market at 58 rupees a share to take a majority stake.
However, only 420,915 Satyam shares were tendered to the offer, representing less than 0.1 percent of the outstanding shares, Tech Mahindra said in a filing to the stock exchange, due to a recent spike in the share price of Mahindra Satyam.
Tech Mahindra held 31.04 percent of Mahindra Satyam after the open offer, which ended on July 1.
Shares in Mahindra Satyam, earlier known as Satyam Computer Services, ended nearly 5 percent lower on Monday at 73.70 rupees but still sharply higher than the open offer price. It is up 56 percent since April 13, when Tech Mahindra won the auction.
Shares in Tech Mahindra dropped 7.6 percent at 695.85 rupees in the main Mumbai market .BSESN that fell 5.8 percent.
Officials at Tech Mahindra were not available to comment on the open offer.
Satyam's founder and then chairman Ramalinga Raju had shocked investors in January by saying profits had been overstated for years, putting in doubt the survival of a company once ranked as India's No. 4 software services exporter.
Tech Mahindra, majority owned by Mahindra & Mahindra, then made its successful bid for a controlling stake at an April auction.
Under the auction conditions, if the public offer was not fully subscribed then Tech Mahindra could opt for a second preferential issue of shares by Satyam to raise its stake to not more than 51 percent of the expanded share capital.
In its filing, Tech Mahindra, 31 percent-owned by Britain's BT Group, said the company intended to subscribe to 198.7 million additional shares at 58 rupees a share in the second preferential allotment.
That would take new parent's stake in Mahindra Satyam to 42.7 percent on the expanded outstanding share base of 1.2 billion, according to Thomson Reuters data. Tech Mahindra was given 302.8 million shares in the first preferential allotment. (Reporting by Sumeet Chatterjee & Janaki Krishnan; Editing by Simon Jessop)