Software services major Tech Mahindra today said it will merge Mahindra Engineering Services (MES) with itself, a move aimed at tapping global opportunities in aerospace and automotive verticals.
The Board of Directors of both companies have approved a proposal to merge MES with Tech Mahindra, the IT major said in a statement.
Catering to automotive, aerospace, defence and manufacturing industries, MES boasts of having over 1,300 employees with revenues of Rs 250.59 crore in FY'13.
The merger, subject to necessary regulatory approvals, will expand MES' global reach and provide access to deeper resource pool.
On the other hand, Tech Mahindra will gain access to some of the key automotive clients across the globe.
The merger process could take about 8-9 months, the statement said.
"MES and Tech Mahindra's Integrated Engineering Services (IES) merger strengthens the existing services portfolio, enhances presence in US and Germany, provides scale and brings in new clients for further expansion," Tech Mahindra Global Head – Integrated Engineering Services - Karthikeyan Natarajan said.
The exchange ratio approved by both the boards has been fixed at 5 shares of Tech Mahindra (face value of Rs 10 each), for every 12 shares of MES (face value of Rs 10 each).
Tech Mahindra will issue 0.426 crore new shares, thereby increasing its outstanding shares to 23.73 crore.
"Our joint go-to-market strategy will help us capture newer markets and enhance our service portfolio especially in aerospace and embedded services segments while bringing value to all our stakeholders," MES CEO Prashant Kamat said.
Khaitan & Co acted as the legal advisor for the transaction.