LTI-Mindtree Merger news: How many stocks existing Mindtree shareholders will get and how it will impact company's employees?
LTI-Mindtree Merger news: The company has also fixed the record date for determining the eligibility of the issuance of the shares of LTI Mindtree.
LTI-Mindtree Merger news: The L&T Group has announced operationalisation of the merger of Mindtree with LTI (Larsen & Toubro Infotech). Post merger, the new entity -- LTI Mindtree will become the 5th largest software company in the country terms of market capitalisation, with a revenue of USD 5.25 billion this year on Monday, according to a PTI report.
The new entity -- LTI Mindtree will begin trading on exchanges from November 24.
So how will this merger affect existing shareholders? According to an exchange filing by Mindtree, 73 fully paid up equity shares of Re 1 each of LTI will be issued and allotted for every 100 fully paid up equity shares of Rs 10 each held in Mindtree.
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The company has also fixed the record date for determining the eligibility of the issuance of the shares of LTI Mindtree. LTI Mindtree record date for share allocation is November 24.
LTI Mindtree's will be headquartered in Mumbai and will be independent of L&T, which will also mean that the head of the new entity will not be on the board of L&T, said Naik, who is the chairman of the new entity while L&T chief executive SN Subrahmanyan will be vice-chairman.
"This year, the combined entity is likely to close with a top-line of USD 5.25 billion, including that of the engineering services under LTTS. We expect this to touch USD 6.2-6.3 billion next fiscal. LTI Mindtree alone will have a top-line of USD 5 billion," group chairman AM Naik said, adding LTTS revenue exceeds USD 1.5 billion now.
Without proffering profit numbers, Naik said traditionally both the companies have been booking 14.5-15 per cent in net margin and we hope not only to sustain this but further improve this as we work as single entity.
"Both companies have been offering 35-40 per cent of the free cash flow in shareholder payouts in the past the same will continue even after merger," Debashis Chatterjee, the chief executive and managing director of LTI Mindtree, said on being asked about any special dividends for shareholder.
LTI Mindtree will have 90,000 employees on its rolls, taking the overall headcount of the software businesses to 1.2 lakh, which includes that of LTTS, spread across in over 30 countries across five continents.
Naik said that L&T will continue to hold 68.73 per cent in the merged entity.
At the current market value on Monday closing, the new entity will have a market cap of Rs 1,52,672.23 crore, placing it much ahead of Tech Mahindra and closer to Wipro.
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