The boards of Mindtree and L&T Infotech approved the merger of the two independently listed IT services companies under the Larsen & Toubro Group. The move will create a $3.5-billion powerhouse and the sixth-largest IT services firm in India by revenue. The combined entity, called LTIMindtree, is expected to leverage complementary strengths, unlocking synergies through scale, cross-vertical expertise and talent pool.
The integration is expected to be completed in 9-12 months subject to shareholder and regulatory approvals. A steering committee will be constituted to oversee the transition till the merger process is complete. The combined entity will be led by Mindtree CEO Debashis Chatterjee, while L&T Infotech CEO &MD Sanjay Jalona has resigned due to personal reasons.
Once the scheme of amalgamation becomes effective, Mindtree shareholders will be issued shares in the ratio of 73 of LTI for every 100 shares of Mindtree. L&T will own 68.7% in the combined entity.
The two entities would explore synergies, lending the merged entity to a stronger portfolio of offerings, enhanced delivery capabilities and a robust large deals funnel. LTI, which clocked $2. 1 billion in revenue in the 2021-22 financial year, has domain expertise across BFSI, manufacturing, energy & utilities. It employs over 46,000 employees. L&T acquired 61% stake in Mindtree in 2019. The Bengaluru-based IT firm has a strong presence in communications, media & technology, CPG, retail and manufacturing verticals. It closed 2021-22 financial year with $1.4 billion in revenue employing 35,000 people. The combined entity will have 81,719 employees.
L&T Group chairman AM Naik said, “L&T group has a majority holding in LTI and Mindtree to bring in better coordination, synergy value and enhance customer benefits. The proposed integration will see LTI and Mindtree jo- int strength to create an IT services company exceeding $3.5 billion. We believe this merger will unlock greater value for all the stakeholders. Going forward, the merged entity will have both the scale and resources to take on bigger challenges and deliver. I don’t see any problem at all in any of the shareholders — small or big — finding themselves at any disadvantage.”
L&T CEO & MD and Mindtree VC S N Subrahmanyan said, “The purpose and idea is to capture synergies from both companies. Within both companies, we have strategic plans up to 2026, which have been approved by boards of both companies. The idea is to hit those targets, we also want to see if the merged entity can achieve more than that.”
Naik said the combined entity will be able to get much better deals. “All customers were very positive and some have gone to the extent of saying that previously we were giving you a $25-million deal, now we have no hesitation in giving you $100 million worth of business. ”