SATYAM ANNOUNCES WINNING BIDDER

Satyam has been struggling as clients cancel contracts

Satyam, the fraud-hit Indian IT firm, says local company Tech Mahindra is to buy a controlling stake in it.

Tech Mahindra put in the highest offer in sealed bids opened on Monday by Satyam's government-appointed board, a company spokeswoman said.

It agreed to buy a 31% stake at 58 rupees ($1.16; 79 pence) a share, then make a public offer to buy 20% more.

Satyam has struggled since founder Ramalinga Raju said in January that its profits had been overstated for years.

The government hopes that the sale of a controlling stake will restore investor confidence in Satyam, which has lost 80% of its market value since January.

Shares in both Satyam and Tech Mahindra rose strongly on the news. At one point, Tech Mahindra's shares were trading as much as 25% higher on the day before falling back.

Tech Mahindra beat Indian engineering firm Larsen & Toubro, which had already built up a 12% stake in Satyam and had been seen as the front-runner in the auction.

Satyam had been one of the biggest players in the booming Indian IT software market, supplying back-office services to firms from around the world, including General Electric and Qantas Airways.

BBC NEWS REPORT.