UPDATE 1-Satyam abandons plan to buy builders

NEW YORK, Dec 16 (Reuters) - India's Satyam Computer Services Ltd SATY.BOSAY.N abruptly canceled its plan to buy two builders partially owned by its top executive for $1.6 billion, after investors pushed its stock down 55 percent.

India's No. 4 software services company said it decided to not go ahead with its proposed acquisition of Maytas Properties and Maytas Infra MAIL.BO in light of the feedback received from the investor community.

“We have been surprised by the market reaction to this decision even though we were quite positive about the merits of the acquisition,” Satyam Chairman B. Ramalinga Raju said in a statement. “However, in deference to the views expressed by many investors, we have decided to call off these acquisitions.”

Earlier on Tuesday the company said it planned to enter India’s depressed construction industry by buying all of privately held Maytas Properties for $1.3 billion and 51 percent of builder Maytas Infra for $300 million.

The two are builders that work on infrastructure projects including highways, ports and water treatment systems. Satyam helps develop software for other businesses.

Ramalinga Raju and other insiders hold 36 percent in Maytas Infra and 35 percent in Maytas Properties.

Shares in Satyam fell $6.85, or 55 percent, to $5.70, after touching a low of $5.05. It was the biggest percentage decliner on the New York Stock Exchange on a day when the Dow Jones industrial average .DJI rose 4.2 percent as the Federal Reserve slashed borrowing costs to a record low. (Additional reporting by Jim Finkle in Boston; Editing by Bernard Orr) (For more M&A news and our DealZone blog, go to