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NEW DELHI: Larsen & Toubro Infotech (LTI) board on Friday approved a scheme of amalgamation with Mindtree. The two companies are subsidiaries of Larsen & Toubro.

The deal involves the no cash consideration. Larsen & Toubro Infotech said it would issue and allot 73 fully paid up equity shares of face value Re 1 each of the company for every 100 fully paid up equity shares of face value Rs 10 in the amalgamating company.

DC Chatterjee will be heading the combined entity. The company entity will be known as LTIMindtree.

The merger will create a $3.5 billion IT services provider. The two companies will keep functioning independently for now. L&T Infotech said there will have minimum overlap between the companies.

Larsen & Toubro Infotech said the amalgamated company is expected to have improved financial strength.

“Particularly, the companies believe the combined business will augment industry-leading revenue growth and profitability. Further, the companies expect that their combined balance sheet will provide diverse strategic options and flexibility arising from cost efficiencies and synergies such as optimization of sales, general and administration (SG&A) costs, consolidation of delivery operations (domestic and overseas) and of overseas entities I branches,” Larsen & Toubro Infotech said.

The move is seen as giving the combined business the opportunity to consolidate its position in the banking, financial services and insurance (BFSI) vertical, enhance scale in high growth verticals like high-tech and consumer packaged goods, retail and expand into new verticals such as travel, transport and hospitality.

The amalgamated company should be able to bid for larger deals and also drive a cohesive “go to market” strategy across the globe,” L&T Infotech said.

The merger is expected to enable the combined business to derive benefits by way of creating more opportunities for growth in customer relationships through enhanced attention to brand building, Larsen & Toubro Infotech said.

The company said it will enable the combined business to cross-sell and up-sell opportunities as part of one combined business, achieve a higher number of active clients, cater to a wider customer base and diversify their combined revenue profile with reduced concentration risk.

LTIAgencies

L&T Infotech’s MD Sanjay Jalona has resigned citing personal reasons. L&T Infotech expects the deal to close in 9-12 months.

Promoter holding in L&T Infotech will increase to 68.73 per cent from 60.99 per cent post the merger at present. The scheme is subject to the approval of the requisite majority of the members and/or the creditors of the company, and necessary no-objection from the stock exchange and sanction by the Mumbai and Bangalore benches of the NCLT.

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