Small shareholders of Mahindra Satyam on Tuesday raised concern over talk of a merger of the company with Tech Mahindra, saying that such a move will affect their interests.

Vehemently opposing the idea of what they called a premature merger, they expressed fears that such a merger will favour Tech Mahindra shareholders and leave them in the lurch. The shareholders were speaking at Satyams first annual general meeting in Hyderabad after the takeover by Tech Mahindra.

We want the company to come back on its feet before the management pushes for a merger. If done in a hurry, the merger will not help investors like us. In order to get a good deal, we want the share price to reach a reasonable level. This will happen only if foreign institutional investors start investing and in the current scenario, no FII would look at the company for investment, said GN Ravi, a shareholder.

Tech Mahindra has not announced any plan for a merger of Mahindra Satyam but that has not stopped speculation of a merger between the two. C Achuthan, independent director on the Mahindra Satyam board, said the company will protect the interest of minority shareholders. Nothing has been finalised on the merger. When the time comes, we will definitely look at addressing concerns of small investors, he said.

Satyams stock was up 8.83% at Rs 69.05 on the Bombay Stock Exchange on Tuesday.

The FIIs, Mr Ravi added, are looking for more clarity in the financials. The company has not settled its outstanding liabilities. It has to sort out legal issues including class-action lawsuits in the US. Relisting on NYSE is another pending issue.

Tech Mahindra acquired Satyam Computer Services in 2009 and changed its name to Mahindra Satyam. The company announced its first financial results in September this year, following the accounting fraud masterminded by founder Ramalinga Raju.

We were told that the merged entity will become a $5-billion company in three years starting March 31, 2010. However, if British Telecom exits Tech Mahindra during this time, around 76% of this revenue should come from Mahindra Satyam. So, we want to wait till we get clarity on this aspect to decide the share-swap ratio, he said.

British Telecom, Tech Mahindras joint venture partner and one of its biggest customers, is looking to exit the company and has already begun the process of reducing its stake. Shareholders also found fault with the joint working pattern of Tech Mahindra and Mahindra Satyam. According to some of them, it was not clear who was benefiting at whose cost.