A sharp surge in the shares of Satyam Computer Services means its new parent will likely need a second preferential issue to gain the majority stake in the company at the centre of India's biggest corporate fraud.
Tech Mahindra won a auction in April for control of Satyam. It bought a 31 per cent stake of new equity, and on Friday launches an open offer to buy up to 20 per cent of shares in the open market at Rs 58 a share to take its stake to 51 per cent.
But Satyam shares now stand at Rs 80.85, having risen by their daily 10 per cent limit on each of the three days since the firm released financial details on Tuesday that showed it remained profitable despite the fraud.
"Logically, people will not tender their shares for a price that is sharply lower than the current market price, even if we assume some correction in the days ahead," said Tejas Doshi, head of research at Mumbai brokerage Sushil Finance.
Tech Mahindra can revise the offer price till June 22, but analysts see little reason for it to do so.
If the offer is not fully subscribed, under the auction conditions Tech Mahindra can opt for a second preferential issue from Satyam to raise its stake to not more than 51 per cent of the further expanded share capital.
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