Today, Larsen & Toubro Infotech (LTI) board approved the proposal of its merger with another Larsen & Toubro company Mindtree “to create an efficient and scaled-up IT services provider exceeding $3.5 billion.“
It will be “LTIMindtree”
In a statement, the company said that LTI and Mindtree have decided that the time is appropriate to combine the strengths of both organisations to better serve the customers. After the merger, the combined name of the two entities will be “LTIMindtree”.
After the merger becomes effective, all shareholders of Mindtree will be issued shares of LTI at the ratio of 73 shares of LTI for every 100 shares of Mindtree. The new shares of LTI so issued will be traded on the NSE and BSE. Promoter holding in L&T Infotech will increase to 68.73 per cent from 60.99 per cent post merger.
Speaking about the merger, A M Naik, Chairman, LTI, said, “This merger represents our continued commitment to grow the IT services business in line with our strategic vision. The highly complementary businesses of LTI and Mindtree will make this integration a ‘win-win’ proposition for our customers, investors, shareholders, and employees.”
According to industry experts, the combined entity will enable it to tap into broader market prospects, reduce costs and lower risk. After the merger, the aggregate revenue of the combined entity will be around $3.5 billion. LTI has a market capitalisation of Rs 1.03 lakh crore, whereas Mindtree has a market capitalisation of Rs 65,285 crore.
L&T Infotech and Mindtree Performance
Both Mindtree and LTI have grown significantly in the last two years under the leadership of Debashis Chatterjee and Sanjay Jalona, respectively. Mindtree, the midcap IT company on April 18, reported a consolidated net profit of Rs 473.1 crore for the quarter ended on 31st March 2022, registering an on-year growth of 49%. In the corresponding quarter last year, the company posted a net profit of Rs Rs 317 crore. And, L&T Infotech, on April 19 reported a consolidated profit after tax (PAT) of Rs 637 crore for the quarter ended March 2022, up 17%from Rs 545 crore in the corresponding quarter of the previous financial year.
Shares of LTI on Friday closed 3.64 per cent lower at Rs 4,593.10 apiece while shares of Mindtree closed 3.88 per cent lower at Rs 3,374.65 apiece on BSE.