L&T Infotech, Mindtree Merge To Create India’s 5th Biggest IT Company: $3.5 Billion Valuation, 80,000 Employees!

Larsen & Toubro Ltd announced that two of its publicly traded software firms L&T Infotech Ltd. and Mindtree Ltd will merge.

Boards of Directors of LTI and Mindtree approved a composite scheme of amalgamation of both the companies.

Significance

This could help unlock potential scale and fight for some of the biggest deals with other IT giants.

L&T will hold 68.73% of L&T Infotech post merger

LTI chief A M Naik said that the merger is symbolic of its commitment to grow the IT services business in line with the company’s strategic vision.

Both the companies are complementary businesses and the integration makes it a “‘win-win’ proposition for our customers, investors, shareholders, and employees”.

What Next

The combined entity was announced to be headed by LTI MD and CEO Sanjay Jalona and Mindtree CEO Debashis Chatterjee.

However, Jalona resigned due to personal reasons.

The companies will continue to function independently for the time being. 

A steering committee will be formed which will oversee the transition till the merger process is complete.

The merged entity will be named “LTIMindtree” which will leverage the benefits of both the brands and create value for all the stakeholders.

Cashing In On Opportunities

LTIMindtree will have both Mindtree and LTI join forces to create an efficient and scaled up IT services provider exceeding $3.5 billion.

The merger comes in the backdrop of surging demand for software firms from businesses wanting to digitize. 

Large IT outsourcing firms are also growing into areas such as cybersecurity, automation and machine-learning support, moving beyond lower-margin traditional back-room services.

LTI Vice-Chairman S N Subrahmanyan said that the merger will help the company become a preferred partner for large-scale tech transformations and create a distinctive employee value proposition.

Other Details

Larsen took over control of Mindtree, which has a market value of $8.3 billion or Rs 65,285 crore, in 2019.

Larsen has around 74% of L&T Infotech, which has a market capitalization of $13.6 billion or  Rs 1.03 lakh crore.

The deal is expected to close in 9-12 months.

The transaction is subject to shareholder and regulatory approvals.

Focus Areas Of Each

Once the integration is done, the team will decide the focus areas.

The main focus area of Mindtree includes communications media and technology, retail, consumer packaged products, and manufacturing.

LTI’s most important verticals include banking, financial services, and insurance.

Becoming 5th Largest IT Firm

LTIMindtree would overtake Tech Mahindra to become the fifth-largest IT services provider.

It will employ over 80,000 people, including 4,000 sales and support personnel.

Currently the top 4 IT firms are led by TCS with the highest market valuation.

It is followed by Infosys, HCL Tech, and Wipro.