LTI & Mindtree to Merge, May Exceed Tech Mahindra’s M-Cap; Share Exchange Ratio?

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LTI & Mindtree to Merge, May Exceed Tech Mahindra’s M-Cap; Share Exchange Ratio?

By Malvika Gurung -- The engineering-to-tech conglomerate Larsen & Toubro (NS: LART ) has announced on Friday, the merger between two of its listed IT majors L&T Infotech and Mindtree (NS: MINT ), at a time when software companies globally are witnessing an unprecedented rise in demand for digitization and expansion into new-age technologies, thereby unlocking potential scale and synergies for the merged entity.

The merged entity will be called ‘LTIMindtree’ and will leverage the advantages of both companies to create value for stakeholders. Also, post-merger, L&T will hold a 68.73% stake in L&T Infotech.

Furthermore, the merged entity LTIMindtree will have an aggregate revenue of about $3.5 billion, making it the fifth-largest IT services provider in the country, in terms of market capitalization, toppling Tech Mahindra (NS: TEML ).

Currently, the top 5 in the list include TCS (NS: TCS ), Infosys (NS: INFY ), HCL Tech (NS: HCLT ), Wipro (NS: WIPR ), and Tech Mahindra.

As per the decided share exchange ratio, for every 100 shares of Mindtree held by a shareholder, 73 shares of LTI will be issued in the amalgamating company.

The merged IT company is expected to have improved financial strength while augmenting industry-leading growth in revenue and profitability.

It will also lead to more opportunities being created, as customer relationships will be enhanced, while the entity will be able to tap into broader market prospects, reduce costs and lower risk, stated a filing.

The merger deal is estimated to close in the upcoming 9-12 months.

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