Mahindra & Mahindra group company, Tech Mahindra has approached Satyam Computer Services for cashless merger as per sources. Satyam is fourth-largest IT Services Company in country. The company is under pressure due to Matyas Deal, which the promoters called-off after protest from other stake-holders.

Tech Mahindra and Satyam are providing complimentary services in IT segment. Tech Mahindra is about on-third size of Satyam and there are good chances of more expertise in IT and ITes services if the deal is finalised. A person close to development said, "The merger of Tech Mahindra into Satyam will work in the deal's favour because it will not be a Goliath gobbling up a smaller company." Tech Mahindra has good client base in Telecom Sector. Satyam Computers has been performing well for the past two quarters, but the stock price has declined quite sharply due to corporate governance issues.

M&M is believed to be in touch with Merril Lynch for necessary transactions. After the news was telecasted on prominent Indian business channel, Tech Mahindra management declined to comment on the situation.

If the proposal of merger is accepted, the new entity would become the third-largest IT Company in the country. A senior executive and stake holder of M&M said, "Anything that offers strategic value to Tech Mahindra would be of interest to the group." He declined to disclose the matter further.

Sources believe that HCL Technologies, HP and some foreign companies have also shown interest to buy Satyam as the company is available at attractive price.

Milan Sheth of Ernst&Young, said, "It's difficult for companies like Tech Mahindra to grow into new domains overnight since they are so niche focused."