Synopsis

ITC shares rose, while Happiest Minds fell, after ITC Infotech announced plans to acquire and merge with the Bengaluru-based IT services firm. ITC Infotech will first buy a 22.1% stake from founder Ashok Soota for Rs 1,330 crore, followed by a share swap. After the merger, ITC will hold 73.4% of the combined entity, while Happiest Minds shareholders will own 19%. The deal will also give ITC Infotech a backdoor listing.

Shares of one of India’s largest conglomerates, ITC, rallied as much as 5% to their day’s high of Rs 267 on the BSE on Tuesday after its wholly owned subsidiary ITC Infotech said it will acquire Bengaluru-based listed software services firm Happiest Minds Technologies. On the flip side, Happiest Minds' stock price declined by over 8% to Rs 373 per share.

As per a stock exchange filing, ITC Infotech will first acquire a 22.1% stake in Happiest Minds from founder and promoter Ashok Soota for Rs 1,330 crore, with the purchase split across two tranches. The initial transaction will then be followed by a share swap between the two companies, under which shareholders will receive 25 ITC Infotech shares for every 81 Happiest Minds shares held.

Following the completion of the merger, ITC Infotech will be listed on the stock exchanges through a backdoor listing. ITC Ltd will hold a 73.4% stake in the merged entity, while Soota and his promoter entities will own 7.6%. Public shareholders will hold the remaining 19%.

Happiest Minds has been assigned an equity value of Rs 6,167 crore for the transaction, while ITC Infotech has been valued at Rs 11,920 crore. Together, the two companies have a combined valuation of more than Rs 18,000 crore.

Ashok Soota, who founded Happiest Minds in 2011, said he was delighted that, after the completion of the legal formalities, the company would become an important part of a larger organisation through its amalgamation with ITC Infotech. He said the two organisations were aligned in their values and shared vision for the future, while their business portfolios had significant complementarity that would ensure synergies.

ITC and ITC Infotech chairman Sanjiv Puri said the combination of the companies' complementary strengths, deep domain expertise and future-ready capabilities would further strengthen their ability to deliver cutting-edge solutions across geographies.

ET had first reported on March 20 that ITC Infotech could potentially acquire a stake in Happiest Minds. On August 29, ET reported details of the proposed transaction, including the merger through a share swap that would effectively result in the backdoor listing of ITC Infotech.

According to Happiest Minds, the combined company will bring together its capabilities in AI, digital engineering, cloud, data, analytics and cybersecurity with ITC Infotech's expertise in enterprise transformation, SAP, product lifecycle management (PLM), cloud, Industry 4.0 and industry-specific technology solutions.

The company said the transaction would make the merged entity India's 11th-largest IT services company, with aggregate annual revenue of Rs 7,033 crore in fiscal 2026.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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