Mumbai The Mumbai and Bengaluru benches of the National Company Law Tribunal have approved the merger of Larsen & Toubro Infotech Limited (LTI) with technology consulting and digital solutions firm Mindtree Limited and LTIMindtree has started functioning as a single entity. , the companies said in a joint statement on Monday.
The companies announced their intention to merge in May. As a part of the merger agreement, all shareholders of Mindtree will be issued LTI shares in the ratio of 73 LTI shares for every 100 shares of Mindtree. The parent, L&T, will hold 68.73% stake in the merged entity. The record date for issue of equity shares of LTI to eligible shareholders of Mindtree has been fixed as November 24.
“The merger positions L&T as the sixth largest IT company by revenue and market cap, we are the fifth largest,” said AM Naik, Group Chairman, L&T and Chairman, LTIMIndustry. Being a bigger player in terms of better margin profile and higher participation in larger deals, greater ability to tailor end-to-end offerings and drive significant value.”
“The combined entity will build growth momentum with differentiated capabilities and greater access to new customers in complementary verticals and create huge cross sell and up sell opportunities. This, Naik said, will provide better value to both new and existing customers through cross-pollination.
“We have consistently given 14.5-15% PAT (profit after tax) and we think we will not only continue this sustainably but also try to improve upon it,” he added.
Nike expects the merger to result in cost savings of at least 1-1.5%. L&T also expects its IT business to contribute around 26% to the group’s total business by 2026, but the contribution to the group’s market capitalization could be much higher, he said.
The group’s IT business, which includes LTI Mindtree and L&T Technology Services, is expected to generate $5.2 billion in revenue this year. Naik expects revenue from the IT business to cross $6 billion next year.
LTIMindtree Chief Executive and Managing Director Debashish Chatterjee expects the merger to provide multiple synergies for the growth of the business.
“There is a natural synergy in terms of capabilities. There are areas where Mindtree is strong and there are areas where LTI is strong. In terms of industries, there is not much overlap. With the two companies coming together, you will have access to more industries than you would individually. For example, LTI is present in the oil and gas sector, while mindtree Not there. Similarly, while Mindtree has a strong presence in sectors such as travel and hospitality, LTI does not.”
Amidst the proliferation of new business models and revenue streams in a rapidly changing world, LTIMindustry will help businesses proactively grow and shape up. Future By harnessing the full power of digital technologies. With top talent, comprehensive offerings, and cumulative experience of over five decades, LTIMindtree brings the scale and diversity of capabilities needed to help businesses re-imagine possibilities,” he added.
At the end of the trading day LTI stock ended on at 5,161 BSEUp 2.05%, while Mindtree shares closed on 3,766.34, up 2.81%.
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