Larsen & Toubro Infotech (LTI) and Mindtree, the two software units controlled by the Mumbai-based engineering firm L&T, are expected to merge. An announcement is likely to happen later today.
L&T has called for a press briefing at 4 pm today. L&T’s Group Chairman will be addressing the media. While the company officials did not confirm the agenda of the briefing, sources told Moneycontrol that it will address the merger plans.
Moneycontrol has learnt that besides Naik, L&T’s Chief Executive Officer SN Subrahmanyan and Mindtree’s CEO Debashis Chatterjee will also be present at the meet.
There has been talk of a merger between Mindtree and L&T Infotech for a long time (LTI). There was a report earlier that the boards of Larsen & Toubro Infotech and Mindtree are expected to meet in the first week of May to finalise the terms of their merger.
The proposed merger comes as software companies are seeing surging demand from businesses embracing the digitization that accelerated during Covid-19. Large IT outsourcing firms are also expanding into areas such as cybersecurity, automation and machine-learning support, moving beyond lower-margin traditional back-room services.
According to industry experts, the combined entity will enable it to tap into broader market prospects, reduce costs, and reduce risk.
Both Mindtree and LTI have grown significantly in the previous two years under the leadership of Debashis Chatterjee and Sanjay Jalona, respectively.
It remains to be seen whether Mindtree CEO and MD Debashis Chatterjee or L&T Infotech CEO and MD Sanjay Jalona will oversee this amalgamated business.
L&T made a hostile takeover of Mindtree in 2019--the first such of an Indian software firm. It owns 61 percent of Mindtree, which has a market capitalization of $8.3 billion. L&T also owns almost 74% of L&T Infotech, which has a market capitalization of $13.6 billion.
Also Read: What potential merger of Mindtree and L&T Infotech means
LTI has a market capitalization of Rs 1.03 lakh crore, whereas Mindtree has a market capitalization of Rs 65,285 crore. Their aggregate revenue is estimated to be around $3.5 billion.
By market capitalization, the united LTI will surpass Tech Mahindra to become the fifth-largest IT services provider. The combined company will employ just over 80,000 people, including 4,000 sales and support personnel.
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