L&T Infotech Ltd. (LTI) and Mindtree Ltd., two of Larsen & Toubro's publicly traded software enterprises, have announced a merger. The merger might help the companies achieve the greater size and compete for mega-deals with other IT behemoths.
"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," according to the press statement. 'LTIMindtree' will be the name of the amalgamated entity.
According to LTI, the combination between LTI and Mindtree is subject to shareholder and regulatory clearances. When the transaction takes effect, all Mindtree stockholders will get 73 LTI shares for every 100 Mindtree shares. The Press Release added, "The new shares of LTI so issued will be traded on the NSE and BSE. Larsen & Toubro Limited will hold 68.73 per cent of LTI after the merger."
The combination of the two publicly traded software companies comes at a time when huge IT outsourcing firms are growing into areas like cybersecurity, automation, and machine-learning assistance, moving beyond lower-margin back-office services. Apart from that, software providers have seen an increase in demand from enterprises adopting digitalisation, which has accelerated during COVID-19.
The combined organisation will become India's fifth-largest IT company, allowing it to access new markets, save expenses, and minimise risk. The combined entity's total revenue will be roughly $3.5 billion after the merger. Mindtree has a market capitalization of Rs 65,285 crore, whereas LTI has a market capitalization of Rs 1.03 lakh crore.
The combined business will overtake Tech Mahindra to become the fifth-largest IT services provider by market capitalization. Over 80,000 individuals will work for the company, including 4,000 sales and support employees. TCS now has the largest market worth among IT companies, followed by Infosys, HCL Tech, and Wipro.
