ITC Expands Technology Ambitions With Happiest Minds Merger: Rs 1,330 Crore Deal Targets USD 1 Billion Revenue

ITC shares gained sharply while Happiest Minds Technologies came under pressure after ITC Infotech announced a strategic combination with Bengaluru-based technology services company Happiest Minds Technologies. ITC Infotech, a wholly owned subsidiary of ITC, will first acquire a 22.106 per cent stake in Happiest Minds for Rs 1,329.72 crore and subsequently merge the two businesses through a share swap. The transaction is aimed at creating a larger, AI-focused technology services company with annual revenue of USD 1 billion by FY28.

ITC Infotech to acquire 22.1 per cent stake

The first step of the transaction involves ITC Infotech acquiring 3,36,61,700 shares, representing 22.106 per cent of Happiest Minds' equity, from founder Ashok Soota and Ashok Soota Medical Research LLP. The consideration for the acquisition is Rs 1,329.72 crore, translating into an average price of around Rs 395 per share. The acquisition will be completed in two tranches and funded through a rights issue by ITC Infotech.

The second step involves the proposed amalgamation of Happiest Minds with ITC Infotech. Under the share swap arrangement, shareholders of Happiest Minds will receive 25 ITC Infotech shares for every 81 Happiest Minds shares held. Following the merger, ITC is expected to own around 73.4 per cent of the combined entity, while existing Happiest Minds shareholders will hold around 26.6 per cent.

Combined entity targets USD 1 billion revenue

The transaction will significantly increase the scale of ITC's technology business. The combined company is expected to have more than 19,000 employees and serve over 800 customers across more than 30 countries. It will target annual revenue of USD 1 billion by FY28.

For FY26, Happiest Minds reported revenue of around Rs 2,315 crore, compared with Rs 2,060.84 crore in FY25, representing growth of 12.3 per cent. ITC Infotech reported revenue of around Rs 4,718 crore, taking the combined FY26 revenue to approximately Rs 7,033 crore.

Complementary technology capabilities

The proposed merger brings together two complementary technology portfolios. Happiest Minds has capabilities across artificial intelligence, digital engineering, cloud, data, analytics and cybersecurity, while ITC Infotech has expertise in enterprise transformation, SAP, product lifecycle management, cloud, Industry 4.0 and industry-specific technology solutions.

The combined business will also have a broader international footprint, with North America accounting for 38 per cent and Europe for 31 per cent of its geographic presence. The companies expect the combination to strengthen their ability to address growing demand for AI-led enterprise transformation.

Why did ITC shares surge?

ITC shares gained as investors viewed the transaction as a strategic diversification and potential value-creation opportunity. The deal gives ITC greater exposure to the fast-growing technology services industry without having to build the entire business organically.

The transaction is also expected to provide ITC Infotech with access to a listed platform through the proposed merger. Once the necessary approvals are secured, ITC Infotech is expected to be listed on the stock exchanges, providing a public market valuation for ITC's technology business.

Why did Happiest Minds shares fall?

Happiest Minds shares declined as the market assessed the proposed share swap valuation and its implications for existing shareholders. The Rs 395 per share acquisition price is an important reference point for investors, while the proposed 25:81 swap ratio will determine how existing Happiest Minds shareholders participate in the merged entity.

The transaction remains subject to shareholder, statutory and regulatory approvals, including approvals from the Competition Commission of India, stock exchanges and the National Company Law Tribunal. The companies expect the transaction to be completed within around 15 months.

Outlook

The proposed merger marks a significant expansion of ITC's presence in technology services and creates a substantially larger platform focused on AI and digital transformation. For Happiest Minds shareholders, the eventual value will depend on the performance of the merged business and the benefits generated by combining the two technology portfolios.

For ITC, the key opportunity lies in transforming ITC Infotech into a larger, independently valued technology business while leveraging the scale and capabilities added through Happiest Minds.

Disclaimer: The article is for informational purposes only and not investment advice