The Larsen & Toubro Infotech (LTI) board recently authorized a merger with Mindtree, creating a $3.5 billion IT services provider. Larsen & Toubro owns both of these businesses.

There will be no cash consideration in the transaction, which is scheduled to close in 9-12 months. Larsen & Toubro Infotech stated that for every 100 fully paid-up equity shares of face value Rs 10 in the amalgamating company, it would issue and allot 73 fully paid-up equity shares of face value Rs 1 to each of the company.

Debashis Chatterjee will lead the new company, which will be known as LTIMindtree. Sanjay Jalona, MD of L&T Infotech, has resigned for personal reasons. L&T Infotech stated that the two companies will continue to operate independently for the time being, with minimal overlap.

The combined company is expected to consolidate its position in the banking, financial services, and insurance (BFSI) vertical, increase scale in high-growth verticals such as high-tech and consumer packaged goods, retail, and advance into new verticals such as travel, transportation, and hospitality. According to Larsen & Toubro Infotech, the combined company will have greater financial strength.

Specifically, the companies believe that the combined business will complement industry-leading revenue growth and profitability.  Furthermore, the companies anticipate that their combined balance sheet will provide diverse strategic options and flexibility due to cost efficiencies and synergies such as optimization of sales, general and administrative costs, consolidation of delivery operations, and overseas branches, according to Larsen & Toubro Infotech.

According to L&T Infotech, the combined company should be able to bid for larger deals while also driving a cohesive go-to-market strategy across the globe. The merger will benefit the combined business by creating more opportunities for growth in customer relationships through increased attention to brand building.

The company will allow the combined business to cross-sell and up-sell opportunities as one combined business, achieve a higher number of active clients, cater to a larger customer base, and diversify their combined revenue profile with less concentration risk.

The promoter’s stake in L&T Infotech will rise to 68.73 percent from 60.99 percent following the merger. The scheme is subject to approval by a majority of the company’s members and/or creditors, a no-objection from the stock exchange, and sanction by the NCLT’s Mumbai and Bangalore benches.

About LTI

LTI is a global technology consulting and digital solutions firm that has assisted over 485 clients in succeeding in a converging world. Founded in 1997 as a subsidiary of Larsen & Toubro Limited, its unique heritage provides them with unrivaled real-world expertise in addressing the most complex challenges faced by businesses across all industries. Every day, their team of over 45,000 LTItes helps their clients improve the efficiency of their business and technology operations while also providing value to their customers, employees, and shareholders.

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About Mindtree 

Mindtree is a global technology consulting and services firm that helps businesses of all sizes gain a competitive advantage, improve customer experiences, and improve business outcomes by leveraging digital and cloud technologies.

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