BENGALURU: Happiest Minds Technologies will merge with ITC Infotech India Ltd, while founder and executive chairman Ashok Soota and Ashok Soota Medical Research LLP will sell a 22.1% stake in the Bengaluru-based IT services company to ITC Infotech for Rs 1,329.72 crore.
The proposed transaction will be carried out in two stages. ITC Infotech will first acquire 3,36,61,700 equity shares, representing 22.106% of Happiest Minds' fully diluted equity share capital, from the promoter group in two tranches. This will be followed by the amalgamation of Happiest Minds with ITC Infotech.
The acquisition will be funded through a rights issue by ITC Infotech. Under the proposed merger, Happiest Minds shareholders, other than ITC Infotech, will receive 25 fully paid-up equity shares of ITC Infotech for every 81 shares held in Happiest Minds. ITC Infotech's shares are proposed to be listed on the BSE and National Stock Exchange after the amalgamation becomes effective.
Following the merger, ITC Limited is expected to hold about 73.4% of the combined company, while Happiest Minds shareholders will hold about 26.6%, according to the investor presentation released by the company.
The companies expect the process to be completed within about 15 months.
The proposed combination will bring together ITC Infotech's capabilities in cloud, data and AI, enterprise technology and digital engineering with Happiest Minds' operations in digital product engineering, data, cybersecurity and AI. The combined business will have a workforce of more than 19,000 professionals and will expand ITC Infotech's presence in the Americas and in sectors including banking and financial services, healthcare, hi-tech and EdTech.
According to the investor presentation, the combined entity is projected to reach $1 billion in revenue by FY28. The presentation also estimates revenue synergies of about 10% and margin expansion of around 100 basis points.
Sanjiv Puri, chairman of ITC Limited and ITC Infotech, said, "Today marks an important milestone in the journey towards Happiest Minds becoming an integral part of ITC Infotech, subject to receipt of regulatory approvals."
Ashok Soota said, “I am delighted that after the completion of legal formalities, Happiest Minds will become an important part of a larger organization through its amalgamation with ITC Infotech.” He added that the companies' business portfolios had significant complementarity.
