Larsen & Toubro Infotech (LTI) board on Friday approved a scheme of amalgamation with Mindtree. Both the companies are subsidiaries of Larsen & Toubro.
According to moneycontrol.com, 73 fully paid up equity shares of Re.1 each of LTI (L & T Infotech) shall be issued and allotted for every 100 fully paid up equity shares of Rs.10 each held in Mindtree. The report also said that Mindtree CEO Debashis Chatterjee will lead combined entity LTIMindtree and LTI CEO Sanjay Jalona has stepped down from his post. The merger will take up company’s valuation to over USD 3.5 billion.
In a press briefing, L&T Group Chairman AM Naik said: “This merger represents our continued commitment to grow the IT services business in line with our strategic vision. The highly complementary businesses of mindtree and LTI will make this integration a win win proposition for our customers, investors, shareholders and employees.”
“Merger would not have impact on employees. If he wants to service all the customers we need considerably increase 15% to 20% increase in the manpower, he addded.
The merger comes as software companies are seeing surging demand from businesses embracing the digitization that accelerated during Covid-19. The development could help the new entity achieve scale and right positioning to unlock mega deals that hitherto went yo big Indian IT services companies, as per experts. L&T holds 61% in Mindtree and a 74% stake in LTI. In 2019, L&T Group had taken over Mindtree.
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Both LTI and Mindtree were trading over 3 per cent lower on the BSE in the morning in a weak market. In Q4FY22, Mindtree’s net profit stood at ₹473.1 crore up by 49.1% yoy, while revenue stood at ₹2,897.4 crore rising by 37.4% yoy. Meanwhile, in Q4FY22, LTI posted a net profit of ₹637.5 crore up by 16.8% yoy and 4.1% qoq. While revenue jumped by 31.6% yoy and 4% qoq to ₹4,301.6 crore.
