Tech Mahindra Merger Extended By 6 Months

Tech Mahindra has said that it has extended the proposal to merge Mahindra Satyam with Tech Mahindra along with certain wholly-owned subsidiaries of the two companies by 6 months.

As per the company’s filing with the BSE, the ‘Scheme of Amalgamation and Arrangement of Venturbay Consultants Private Limited and Satyam Computer Services Limited and C&S Systems Technologies Private Limited and Mahindra Logisoft Business Solutions Limited and CanvasM Technologies Limited with Tech Mahindra Limited and their respective shareholders and creditors ('the Scheme'), the Board of Directors extended the validity of the Scheme by a further period of six months i.e. up to September 30, 2013.’

Last year, on March 21, 2012, Tech Mahindra had announced this merger in an exchange ratio of 2 shares of Tech Mahindra for every 17 shares of Mahindra Satyam. On a pro-forma basis, the shareholding pattern in the combined entity was proposed to be approximately as follows –

Shareholding Pattern in the Combined Entity

The proposed merger had secured the mandate of both boards and shareholders. However, minority shareholders had challenged the swap ratio in the Andhra Pradesh High Court.

The merged entity would have revenues of approximately USD 2.4 billion, 75000+ employees and more than 350 active clients across 54 countries. The entity would be able to provide Tech Mahindra’s expertise in mobility and systems integration and Mahindra Satyam’s expertise in enterprise solutions across multiple verticals and clients. The combination would also benefit from operational synergies, economies of scale, sourcing benefits and standardisation of business processes.

Sources have indicated the merging of systems, process, management and strategies to be well in progress and to be complete soon. The combined entity will be strong and will have the potential to unlock value due to the provision of a larger portfolio to verticals and clients. We, at DSIJ, maintain our positive outlook on the individual companies, and furthermore, on the combined entity.