Tech Mahindra and Mahindra Satyam to merge
Deal will create one of the largest offshoring companies in the world
Tech Mahindra and Mahindra Satyam have their intent to merge, creating one of the largest offshoring companies in the world.
The new entity will have revenues of approximately $2.4bn and nearly 75,000 workers in 54 countries.
Mahindra Satyam was created when Tech Mahindra took a majority stake in fraud-hit Satyam Computers. Under the deal 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.
The new company will combine competencies in telecoms, manufacturing, technology, media and entertainment, banking and financial services, retail and healthcare.
Anand G Mahindra, chairman, Tech Mahindra commented: "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."
CP Gurnani, Whole-time Director and CEO of Mahindra Satyam added: "The Mahindra Satyam turnaround is a shining story of determination and grit and now comes to its most important chapter, with this merger. As enterprises the world over look to bolster their IT strategies to keep pace in the connected world, this merged entity will provide the perfect blend of capability to address this evolving market."
Ed Thomas, senior analyst at Ovum had the following comment: “It is nearly three years since Indian IT services firm Tech Mahindra secured a majority stake in local rival Satyam, so the only surprise about today’s news that the two companies are to merge is that it has taken so long to happen.
“That is not to say that this announcement bring the saga to an end. It will take the rest of the year for the merger process to be concluded and no name for the combined entity has yet been announced. On this latter point, it will be interesting to see if the Mahindra Group, which will own over one-quarter of the new operation, decides to finally rid itself of the Satyam brand, which was badly tarnished by the accounting scandal that came to light in 2008.”
The deal is subject to regulatory approval.