Indian IT companies Mahindra Satyam (SAYCY, quote) and Tech Mahindra announced separately today that their boards will meet March 21 to consider a possible merger. The two companies may also combine several of their wholly-owned subsidiaries.
Mahindra Satyam, formerly known as Satyam Computer Services, was purchased in 2009 by billionaire Anand Mahindra. At the time, the company had been rocked by a massive accounting scandal, resulting in the arrest and imprisonment of Chairman Ramalinga Raju.
Three years later, Mahindra has turned the company around. SAYCY reported better-than-expected financial results on February 1, with quarterly sales up 34% year-over-year and profit nearly quintupling. SAYCY is slightly larger than Tech Mahindra, which has also reported solid results over the last year.
A merger of the two companies has been under consideration for some time, but has been delayed due to legal issues relating to the 2009 accounting scandal. Those issues may now be resolved.
Satyam is ranked #5 among Indian IT companies but it’s a distant #5. If combined, Mahindra Satyam and Tech Mahindra will still be only about a third the size of Infosys (INFY, quote) or Wipro (WIP, quote), based on annual sales.