Mahindra Group is merging its engineering services unit Mahindra Engineering Services Ltd with its flagship IT services company Tech Mahindra Ltd, as per a stock market disclosure.
According to the scheme of amalgamation, Mahindra Engineering shareholders will get five shares of Tech Mahindra for every 12 shares of Mahindra Engineering. All assets and liabilities of Mahindra Engineering will be transferred and vested in Tech Mahindra, the company said in the release.
Mumbai-based Mahindra Engineering Services is engaged in providing engineering services to automotive, aerospace and the manufacturing industry.
It offers computer-aided design and engineering, product lifecycle management services, concept development, testing, rapid prototyping, manufacturing simulation, knowledge based engineering and automotive embedded system services. The firm, a subsidiary of M&M, had revenues of Rs 250 crore in FY13.
With the merger, promoters’ holding in Tech Mahindra will inch up from 36.5 per cent to 37.5 per cent. Promoters’ holding had shrunk post merger with Mahindra Satyam early this year from 47 per cent.
Shares of Tech Mahindra were trading at Rs 1,697 a piece, up 0.36 per cent on BSE in a strong Mumbai market on Friday at 12.26 pm.
At this price, the merger is valued at around Rs 723 crore ($115 million).
In June, four years after acquiring a strategic stake in the auditing scam-tainted Mahindra Satyam Ltd (formerly Satyam Computer Services Ltd), Tech Mahindra Ltd completed the merger of Mahindra Satyam with itself, creating the fifth-largest software services company with revenues of $2.7 billion and 84,000 employees. It is now behind TCS, Wipro, Infosys and HCL.
In April 2013, Tech Mahindra acquired lab assets and operations of the Type Approval Lab of Sony Mobile communications AB for an undisclosed amount.
(Edited by Joby Puthuparampil Johnson)
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