BENGALURU: Larsen & Toubro (L&T) on Friday announced the merger between its IT services business units L&T Infotech (LTI) and mid-cap IT company Mindtree. The merged entity, which will be called LTI Mindtree, has now become the fifth largest IT services provider after TCS, Infosys, HCL and Wipro in terms of market capitalisation, as it stands at Rs 1.68 lakh crore.
Shareholders of Mindtree will be issued shares of LTI at the ratio of 73 shares of LTI for every 100 shares of Mindtree.
LTI Chairman A M Naik said, “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."
L&T took over Mindtree in 2019 and owns 61% of the IT company. L&T owns about 74% stake in L&T Infotech. When L&T took over Mindtree, it was said that the latter will be run as a separate entity, distinct from LTI and L&T Technology Services. When L&T took control of the company, Mindtree co-founders NS Parthasarathy, Krishnakumar Natarajan and Rostow Ravanan had quit the firm. Mindtree became a public company in 2006 and its IPO was oversubscribed by over a hundred times.
Mindtree has reported a 49% increase in its fourth quarter net profit at Rs 473 crore for the quarter ended March 31, 2022. Its revenue for FY22 was at Rs 10,525.3 crore. In the fourth quarter ended March 31, 2022, LTI reported Rs 637.5 crore net profit and revenue at Rs 4,301.6 crore. It crossed the $2 billion revenue mark with 26% growth in FY22.
While shares of L&T Infotech on Friday fell 3.64% and closed at Rs 4,593.10, Mindtree shares closed at Rs 3,376, down 3.84% on the BSE.