Tech Mahindra, Satyam to merge at 1:8.5 swap ratio
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Nearly three years after acquiring Satyam Computer Services, the Mahindra Group today announced the merger of Mahindra Satyam with its another technology arm Tech Mahindra, creating the country's fifth largest software firm by market capitalisation with an estimated annual revenue of about $2.4 billion.
The merger will take place through a share swap, under which shareholders of Mahindra Satyam will get one share of Tech Mahindra for every 8.5 shares they hold. The merged entity, which is yet to be named, will be headquartered in Mumbai and will have an employee strength of over 75,000 and more than 350 active clients across 54 countries.
The process is likely to be completed in around nine months after all necessary approvals are in place. The merger will however, be effective from April 1, 2011.
Markets gave a thumbs up to the deal as the share price of both Tech Mahindra and Mahindra Satyam rose by 5.5 per cent and 4.6 per cent respectively. "The combined entity would be having market cap of about Rs 17,000 crore, making it the fifth largest IT company in terms of market cap," said Jagannadham Thunuguntla, strategist and head of research, SMC Global. Mahindra Satyam CEO CP Gurnani is most likely to take over as the CEO of the merged entity. "I have not been able to see any other candidate, so no," said Vineet Nayyar, vice-chairman and MD of Tech Mahindra while answering a question on whether there was any candidate other than Gurnani for the post.
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