L&T Infotech And Mindtree To Merge To Create $22-Billion Company, Says Report

The boards of Mindtree Ltd and Larsen & Toubro Infotech Ltd could consider share swap ratios for the merger as early as next week

The proposed merger between Mindtree and L&T Infotech comes as software firms are seeing surging demand from businesses embracing the digitisation that accelerated during Covid. Image: Getty

New Delhi: Engineering behemoth Larsen & Toubro is considering a merger between two of its software firms, Bloomberg reported quoting sources familiar with the matter.

According to the report by the news agency, the Indian conglomerate is seeking to scale up its two publicly traded IT services companies, Mindtree Ltd and Larsen & Toubro Infotech Ltd, that can compete with global giants.

Mumbai-headquartered L&T acquired control of Mindtree in 2019. The conglomerate holds about a 61 per cent stake in the company, which has a market value of $8.3 billion, and has around 74 per cent of L&T Infotech, which has a market capitalisation of $13.6 billion, according to Bloomberg data.

After the proposed merger between the two firms, the combined entity will create a company with $22-billion market capitalisation.

As early as next week the boards of Mindtree and Larsen & Toubro Infotech could consider share swap ratios for the merger, one of the sources said.

The two companies have minimal overlap in businesses or clients, and a tie-up would give them better pricing power and lower costs, a source added.

Deliberations around the merger deal are ongoing and the plan could be delayed or fall apart, the people said.

Mindtree and L&T Infotech are scheduled to report earnings Monday and Tuesday, respectively.

The proposed merger comes as software companies are seeing surging demand from businesses embracing the digitisation 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.

Shares of Mindtree and L&T Infotech pared losses after the Bloomberg News report.

Mindtree was down 4.1 per cent, having fallen as much as 6.5 per cent earlier in the day, while L&T Infotech was 3.2 per cent lower after sinking as much as 3.9 per cent.