Tech Mahindra Bids Highest for Satyam

India's Tech Mahindra Ltd. won the bid to acquire a controlling stake in the beleaguered software giant Satyam Computer Services Ltd. (SAY) on Monday for over $500 million.

Tech Mahindra offered a bid of 58 Indian rupees per share for a 31% stake in Satyam, beating two other rivals: engineering major Larsen & Toubro Ltd and private equity firm WL Ross & Co.

Tech Mahindra, in which Britain's BT Group (BT) has 31% stake, will make a public offer to acquire an additional 20% in Satyam at the same price.

Last January, software giant Satyam shocked investors by revealing that its assets were overstated by more than $1 billion. Although founder B. Ramalinga Raju, co-founder B. Rama Raju, CFO Srinivas Vadlamani and three other employees have been arrested for cheating and forgery, investor confidence on Satyam has dwindled.

The acquisition is expected to restore confidence in India's software services sector, whose problems have been compounded by the ongoing global economic downturn.

Saytam's ADR plunged approximately 14% today, amid more-than-double usual volume of about 7.4 million, compared to average volume of about 2.7 million.

Read the full analyst report on SAY