Mumbai: The diversified Mahindra Group on Wednesday announced the long-awaited merger of Mahindra Satyam with its another technology arm Tech Mahindra in an all-share deal that would create the country's fifth largest software firm with an estimated annual revenue of about USD 2.4 billion.
Under the deal, which was cheered by investors of both the companies in the stock market today, would involve the shareholders getting two shares of Tech Mahindra for every 17 shares held in Mahindra Satyam.
The merger, to become effective retrospectively from April 2011, would create a single IT entity with an estimated market value of over USD 3.5 billion, revenue of about USD 2.4 billion and a combined workforce of over 75,000 employees.
The deal also marks the completion of a turnaround story of once scam-hit Satyam Computer, which was rechristened as Mahindra Satyam after being acquired by Anand Mahindra-led group, and would propel the combined entity to the top league of Indian IT firms, such as TCS, Infosys, Wipro and HCL Tech.
The analysts said that the merged entity was likely to become India's fifth largest software firm in terms of revenue as well as market value.
The shareholders of both the companies welcomed the merger, pushing share prices of Mahindra Satyam as well as Tech Mahindra higher by 4.6 percent and 5.5 percent, respectively. At the end of today's trade, Tech Mahindra commanded a market value of Rs 8,712 crore, while that of Mahindra Satyam was Rs 9,126 crore.
Tech Mahindra shares closed at Rs 683.90 at the BSE, while Mahindra Satyam settled at Rs 77.55.
Commenting on the merger, group chief Anand Mahindra wrote on the social networking site Twitter: "We now begin to write the next chapter."