L&T Infotech Mindtree Merger: L&T Infotech Announces Merger with Mindtree

NEW DELHI: The board of Larsen & Toubro Infotech (LTI) on Friday approved a plan to merge with Mindtree, creating a $3.5 billion IT services provider. Both companies are subsidiaries of Larsen & Toubro.

The deal, which is expected to close in 9 to 12 months, does not involve any cash consideration. Larsen & Toubro Infotech said it will issue and allot 73 fully paid shares with a par value of Re 1 each of the company for every 100 fully paid shares with a par value of Rs 10 in the merging company.

DC Chatterjee will lead the combined entity, which will be known as LTIMindtree. L&T Infotech Managing Director Sanjay Jalona has resigned for personal reasons.

The two companies will continue to operate independently for the time being, L&T Infotech said, adding that there will be minimal overlap between the two companies.

The move is seen as giving the combined company the opportunity to consolidate its position in the banking, financial services and insurance (BFSI) vertical, improve its scale in high-growth verticals such as high tech and consumer packaged goods, retail and to expand into new verticals such as travel, transportation and hospitality.

Larsen & Toubro Infotech said the combined company should have improved financial strength.

“In particular, the companies believe that the combined business will increase industry-leading revenue growth and profitability. In addition, the companies expect their combined balance sheet to provide diverse strategic options and flexibility resulting cost savings and synergies such as optimization of sales, general and administrative costs, consolidation of delivery operations and overseas branches,” said Larsen & Toubro Infotech.

The combined company should be able to bid for larger transactions and also conduct a consistent “go-to-market” strategy across the globe,” L&T Infotech said.

The merger should allow the combined company to reap benefits by creating more opportunities for growth in customer relationships through an increased focus on brand building, Larsen & Toubro Infotech said.

The company said this will allow the combined business to cross-sell and up-sell within a single combined business, reach more active customers, cater to a broader customer base and diversify. their revenue profile combined with reduced concentration risk.

Agencies

The promoter’s stake in L&T Infotech will increase from 60.99% after the merger to 68.73% currently. The scheme is subject to the approval of the required majority of the members and/or creditors of the company, and the necessary non-objection of the stock exchange and the sanction of the Mumbai and Bangalore benches of the NCLT.

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