Mahindra Satyam to Merge with Tech Mahindra
The Boards of Directors of Tech Mahindra and Mahindra Satyam have approved a proposal to merge Mahindra Satyam with Tech Mahindra along with certain wholly owned subsidiaries of Mahindra Satyam and Tech Mahindra.
Announced today, March 21, the merger is supposed to bring operational synergies between the two companies. It will result in the creation of a new offshore services player with revenues of approximately US$2.4bn, over 75,000 people and more than 350 clients across 54 countries.
The joint entity, according to the company, will have a unified ‘go-to-market’ strategy targeting different market verticals including Telecom, Manufacturing, Technology, Media & Entertainment, Banking Financial Services and Insurance, Retail and Healthcare.[ Also Read: M. Rajyalakshmi on the Board of Mahindra Satyam ]
“This merger will help propel the combined entity into the top tier of Indian software and services companies, achieving the Group’s key objective of being in a leadership role in each of our focus business areas,” said Anand G Mahindra, chairman, Tech Mahindra.
The exchange ratio recommended by the valuers and approved by both the boards is 2 shares of Tech Mahindra (face value of Rs. 10 each), for every 17 shares of Mahindra Satyam (face value of Rs. 2 each).
On a pro-forma basis, the Mahindra Group will own 26.3% in the combined entity, British Telecom will own 12.8%, 10.4% will be held as treasury stock, 34.4% to be held by the public shareholders of Mahindra Satyam and the balance 16.1% will be held by the public shareholders of Tech Mahindra.[ Also Read: It’s Not Only about Money, Honey ]
Tech Mahindra will issue 10.34 crore new shares, thereby increasing its outstanding shares to 23.08 crore and its equity capital to Rs 230.8 crore.
Mahindra Satyam, a leading tech services company, is part of the $14.4 billion Mahindra Group, a global federation of companies and one of the top business houses based in India.
Tech Mahindra is a leading provider of solutions and services to the telecommunications industry with a majority stake owned by Mahindra & Mahindra Limited, in partnership with British Telecommunications plc.
[ US$1 = Rs. 50 approximately ]
Photo courtesy: Mahindra Satyam