Satyam in a spin after trying to keep it in the family

India's Satyam Computer Services is to take undertake emergency measures to regain investors confidence after its stock plunged over an aborted attempt by the group to buy companies controlled by the chairman's family.

The Financial Times reports India's fourth largest information technology outsourcing company by revenue was considering a share buyback, an increase in its dividend payout or other steps to try to reverse the fallout from the proposed deal that institutional investors warned would ruin foreign investor sentiment in India.

Earlier in the week, Satyam proposed late on Tuesday to spend US$1.6bn on acquiring property and infrastructure companies Maytas Properties and Maytas Infra, but then abruptly cancelled the deal only seven hours later after an unprecedented revolt from India's normally subdued institutional investor community.

The deal outraged investors because Satyam, which is only 8.6% owned by the family of Satyam chairman and founder B. Ramalinga Raju, elected to buy out Maytas Properties and Maytas Infra without seeking independent shareholder approval.

Citigroup, JP Morgan and Merrill Lynch downgraded Satyam over the proposed acquisition and slashed their share price estimates by up to half.