(Bloomberg) -- Mindtree Ltd. and Larsen & Toubro Infotech Ltd., two software units controlled by a Mumbai-based engineering conglomerate, have agreed to merge as they seek scale to compete with global digital giants.
Shareholders of Mindtree will be issued 73 L&T Infotech shares for every 100 shares held, according to an exchange filing by the companies on Friday evening. Larsen & Toubro Ltd., the parent company, will hold 68.7% of the combined entity after the merger. The announcement confirms an earlier Bloomberg News report.
The proposed merger comes as software companies see surging demand from businesses embracing the digitization that accelerated during Covid-19. Large IT outsourcing firms are also expanding into areas including cybersecurity, automation, and machine-learning support, moving beyond lower-margin traditional back-room services.
The combined entity named LTIMindtree Ltd. will be headed by Debashis Chatterjee, chief executive officer of Mindtree, according to the filing. L&T Infotech’s chief executive officer resigned from the company citing personal reasons, the company said in a statement that followed the merger announcement.
Shares of Mindtree fell 3.9% in Mumbai trading on Friday, while L&T Infotech dropped 3.61%. The combined entity will have a market capitalization of about $18 billion, according to Friday’s share prices.
KPMG advised Mindtree on the deal, while L&T Infotech worked with Citigroup Inc.
(Updates with details from second paragraph.)
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