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L&T Infotech and Mindtree to merge to create large-scale IT company

L&T Infotech Ltd. and Mindtree Ltd., two of Larsen & Toubro’s publicly traded software enterprises, have announced a merger. The merger could help the companies achieve more extensive scale and compete for mega-deals with other IT behemoths. 

L&T will own 68.73 percent of L&T Infotech after the merger.

“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,” LTI chief A M Naik said.

According to the exchanges, L&T Infotech’s Managing Director and Chief Executive Officer Sanjay Jalona and Mindtree CEO Debashis Chatterjee would lead the combined entity. 

All Mindtree shareholders will be issued shares of L&T Infotech at a ratio of 73 shares of LTI for every 100 shares of Mindtree once the scheme takes effect. LTI’s newly issued shares will be traded on the NSE and BSE. 

For now, the companies will operate independently. A steering committee will oversee the transition until the merger is completed.

“The name of the combined entity will be “LTIMindtree” leveraging the advantages of both the brands and creating value for all the stakeholders,” according to an exchange filing.

Mindtree and LTI will combine their strengths to form a highly efficient and scaled-up IT services provider with a market cap of more than $3.5 billion. 

The merger occurs as software companies experience increased demand from enterprises adopting digitization, which surged during Covid-19. Moving beyond lower-margin traditional back-room services, large IT outsourcing firms are growing into areas such as cybersecurity, automation, and machine-learning support.

“This (merger) will help us emerge as a partner of choice for large-scale tech transformations and create a distinctive employee value proposition,” said LTI Vice-Chairman S N Subrahmanyan.

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

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