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Larsen’s Software Units to Merge in $18 Billion Stock Deal

(Bloomberg) -- Mindtree Ltd. and Larsen & Toubro Infotech Ltd., two software units controlled by a Mumbai-based engineering conglomerate, have agreed to merge as they seek scale to compete with global digital giants.

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Shareholders of Mindtree will be issued 73 L&T Infotech shares for every 100 shares held, according to an exchange filing by the companies on Friday evening. Larsen & Toubro Ltd., the parent company, will hold 68.7% of the combined entity after the merger. The announcement confirms an earlier Bloomberg News report.

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The proposed merger comes as software companies see surging demand from businesses embracing the digitization that accelerated during Covid-19. Large IT outsourcing firms are also expanding into areas including cybersecurity, automation, and machine-learning support, moving beyond lower-margin traditional back-room services.

The combined entity named LTIMindtree Ltd. will be headed by Debashis Chatterjee, chief executive officer of Mindtree, according to the filing. L&T Infotech’s chief executive officer resigned from the company citing personal reasons, the company said in a statement that followed the merger announcement.

Shares of Mindtree fell 3.9% in Mumbai trading on Friday, while L&T Infotech dropped 3.61%. The combined entity will have a market capitalization of about $18 billion, according to Friday’s share prices.

KPMG advised Mindtree on the deal, while L&T Infotech worked with Citigroup Inc.

(Updates with details from second paragraph.)

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