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Confirming all rumors, the infrastructure giant L&T announced the merger of its two IT services companies: L&T Infotech and Mindtree, after the Board of L&T Infotech approved the merger.
L&T Infotech is a subsidiary of L&T in which the infra giant holds 74%. Mindtree was acquired by the infra giant in 2019 and currently holds 61% in the midcap company.
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The merger is expected to close in 9-12 months and involves no cash consideration. All shareholders of Mindtree will be allotted 73 shares of LTI against 100 shares of Mindtree held. The combined entity will be called "LTIMindtree" and will be led by Debashish Chatterjee, CEO of Mindtree.
This merger will create the fifth-largest IT services company in India, surpassing Tech Mahindra, with aggregate revenue of $3.5 billion. Larsen & Toubro will hold 68.73% of the combined entity.
“The Boards of Directors of LTI and Mindtree at their respective meetings held today approved a composite scheme of amalgamation of both these independently listed IT services companies under the Larsen & Toubro Group," a press release stated.
The combined entity will be able to tap broader markets, lower risk, and reduce costs. The competition and demand for IT services have spiked sharply as the dependence on technology has increased greatly ever since Covid-19.
The stock of L&T Infotech closed at Rs 4,953 per share on Friday, while Mindtree closed at Rs 3,373.80 per share.
Article by Aman Agarwal.
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