Satyam is an attractive buy, but Modi has to be careful about how he values his latest acquisition target
Did your stock broker try to assure you recently that investors at the bourses are a rational lot? And have you felt the deep urge to trust his instincts on the same? If so, you would be unaware of of the way Spice Communications’ stock soared massively by 68.9% to touch Rs.80.65! The reason was ebulience of investors with respect to Spice Corp. Chairman B. K. Modi’s latest bid to acquire 51% of Satyam Computers. Now that would be perfectly rational, barring the minor detail missed by these investors; that Modi has nothing to do with Spice Communications ever since he sold off his stake in the company to Aditya Birla owned Idea Cellular!
Now that we have pulled the ‘rational’ carpet under your feet, allow us to analyse the rationale of Modi’s new found interest in the disgraced Satyam. Spice’s current investments in Multi Screen Media, Spice Cinemas and mobile retail wing HotSpots do not offer much synergy with Satyam. At the most, they have a BPO, which would get a massive shot in the arm! Speaking exclusively to B&E, Modi reveals, “Yes, we are interested in taking charge of Satyam and have presented a formal bid to acquire 51% stake and would name the new company Spice Innovations.” In June 2008, Modi had sold off his stake in Spice Telecom for Rs.22 billion and was looking at acquiring a company with global scale.
Did your stock broker try to assure you recently that investors at the bourses are a rational lot? And have you felt the deep urge to trust his instincts on the same? If so, you would be unaware of of the way Spice Communications’ stock soared massively by 68.9% to touch Rs.80.65! The reason was ebulience of investors with respect to Spice Corp. Chairman B. K. Modi’s latest bid to acquire 51% of Satyam Computers. Now that would be perfectly rational, barring the minor detail missed by these investors; that Modi has nothing to do with Spice Communications ever since he sold off his stake in the company to Aditya Birla owned Idea Cellular!
Now that we have pulled the ‘rational’ carpet under your feet, allow us to analyse the rationale of Modi’s new found interest in the disgraced Satyam. Spice’s current investments in Multi Screen Media, Spice Cinemas and mobile retail wing HotSpots do not offer much synergy with Satyam. At the most, they have a BPO, which would get a massive shot in the arm! Speaking exclusively to B&E, Modi reveals, “Yes, we are interested in taking charge of Satyam and have presented a formal bid to acquire 51% stake and would name the new company Spice Innovations.” In June 2008, Modi had sold off his stake in Spice Telecom for Rs.22 billion and was looking at acquiring a company with global scale.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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