The US$14.4-billion Mahindra Group has unveiled the widely anticipated merger of its two IT services firms, Tech Mahindra and Mahindra Satyam, creating a US$2.4-billion entity, which is poised to be India's fifth-largest software outsourcing company by revenue.
As part of the merger, investors will get two Tech Mahindra shares for every 17 shares of Mahindra Satyam. The group will own 26.3% in the combined entity while British Telecom, a strategic partner of the group in Tech Mahindra, will hold 12.8%. Since Tech Mahindra currently holds 42.65% in Mahindra Satyam, 10.4% equity of the new entity that will come in existence because of this cross-holding, post-merger, this equity will be held as treasury stock in a trust, said the management.
Source: Tech Mahindra