Shares of Happiest Minds Technologies Ltd. experienced a significant downturn, plunging nearly 9% in Tuesday's trading following the announcement of its merger with ITC Infotech. Conversely, ITC Ltd. shares climbed by 5% on the news, as it is set to become the promoter of the newly merged entity.
Merger Details and Share Swap Ratio
The proposed merger outlines a specific share swap ratio where Happiest Minds shareholders will receive 25 equity shares of ITC Infotech for every 81 shares they hold in Happiest Minds. This translates to an implied value of Rs 405 per share for Happiest Minds, valuing the company at approximately Rs 6,167 crore. The deal also includes ITC Infotech acquiring a 22.1% minority stake in Happiest Minds from promoter Ashok Soota and his associated entities for Rs 1,330 crore.
Post-merger, ITC Ltd. will hold a substantial 73.4% stake in the combined technology services company, with Happiest Minds shareholders owning the remaining 26.6%.
ITC Infotech to List Publicly
A key outcome of this merger is the planned listing of ITC Infotech on both BSE Limited and the National Stock Exchange of India Limited. This move will bring a new significant player to the Indian stock market, creating a technology services powerhouse.
A New Technology Powerhouse
The merged entity aims to achieve an annual revenue of $1 billion by fiscal year 2028, boasting a workforce of over 19,000 employees and serving more than 800 customers across 30 countries. This strategic combination will integrate Happiest Minds' strengths in AI, digital engineering, cloud, data analytics, and cybersecurity with ITC Infotech's established expertise in enterprise transformation, SAP, Product Lifecycle Management (PLM), cloud, and Industry 4.0 solutions.
Ashok Soota, Chairman & Chief Mentor, Happiest Minds Technologies, expressed his enthusiasm for the merger: “I am delighted that upon the completion of necessary approvals and legal formalities, Happiest Minds will become an important part of a larger organization through its merger with ITC Infotech. The two organizations are aligned on our values and shared vision for the future. There is very significant complementarity in our business portfolios which will ensure synergy. We believe that ITC Infotech is the best partner for Happiest Minds to fulfil its destiny and we are pleased that our team will have a welcoming new home.”
Approvals and Timeline
The merger is subject to various customary statutory, shareholder, and regulatory approvals, including those from the Competition Commission of India, relevant stock exchanges, and the National Company Law Tribunal. The companies anticipate the transaction to be finalized within the next 15 months. Until all necessary approvals are secured, both Happiest Minds and ITC Infotech will continue to operate independently.