Tech Mahindra completes Mahindra Satyam merger, retains own name - Angel Broking

Tech Mahindra yesterday announced that it has completed the merger of associate company Mahindra Satyam with itself to create the country's fifth-largest IT services company, with annual revenue of ~US$2.7 billion, 84000 employees and 540 customers in 46 countries. The combined entity now has 11 locations in India and 15 overseas for BPO operations and software development. The merged entity will be called Tech Mahindra with Anand Mahindra as chairman of the company. CP Gurnani will be the MD and CEO of the merged entity and Milind Kulkarni will take charge as the CFO.

Part of the US$16bn Mahindra group, Tech Mahindra purchased Satyam in a government-backed auction in 2009 after the founder of the company admitted to one of India's biggest accounting frauds. Currently Tech Mahindra owns ~43% of Satyam. The board of Tech Mahindra and Mahindra Satyam had approved the merger on March 21, 2012. After an approval from the Mumbai High Court, the merger had been awaiting clearances from the Andhra Pradesh High Court, which gave the nod on June 11, 2013. The share swap will take place on July 5. The swap ratio for the merger had been fixed last year at 8.5 shares of Mahindra Satyam for every one share of Tech Mahindra.

After the merger, ~54% of the company's revenues will come from the telecom vertical as Tech Mahindra is focused mainly on this one. Tech Mahindra has, since acquiring Satyam, been trying to diversify into other verticals using the latter's existing presence in those. Management indicated that there will be no job losses post the merger. The company will now be divided into three units - Telecom, Enterprise and BPO. We continue to remain positive on Tech Mahindra with a target price of Rs. 1,170.

Source : Equity Bulls

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