ITC Infotech, the IT services arm of ITC, will acquire a 22.1% stake in Happiest Minds Technologies for Rs 1,330 crore, according to an exchange filing.
The acquisition will be funded through a Rs 1,330 crore rights issue. As part of the transaction, Happiest Minds will merge with ITC Infotech, following which ITC Infotech will be listed on the stock exchanges.
Under the proposed share-swap arrangement, Happiest Minds shareholders will receive 25 ITC Infotech shares for every 81 shares held in Happiest Minds.
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The transaction values Happiest Minds at Rs 405 per share, or around Rs 6,167 crore, while ITC Infotech has been valued at Rs 1,312 per share, or around Rs 11,920 crore.
Following the merger, ITC Ltd is expected to hold around 73.4% of the combined entity, while existing Happiest Minds shareholders will own approximately 26.6%.
The combined business is expected to benefit from increased scale, with Americas revenue targeted to double. The companies are also targeting synergies of around 10% of revenue, along with an estimated 100-basis-point expansion in margins.
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The transaction is expected to be earnings-per-share accretive in the first full year of operations of the combined entity.
The deal is expected to be completed within approximately 15 months, subject to regulatory and other approvals.
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