Indian IT services company Mahindra Satyam has finally merged with Tech Mahindra, a specialist provider of information technology (IT) solutions and services to the telecommunications industry.
The long-awaited formal merger was announced today in India. The merger comes more than four years after the US$16 billion- Mahindra & Mahindra Group acquired a controlling stake in the then- fraud-hit Satyam Computer Services and renamed it Mahindra Satyam.
The Boards of Tech Mahindra and Mahindra Satyam had approved the merger on 21 March 2012. After an approval from Mumbai high court, the merger had been awaiting clearance from the Andhra Pradesh High Court, which gave the nod on 11 June 2013.
"Today we have fulfilled the commitment made in 2009, when we acquired Satyam, to jointly become one of the largest, diversified players leveraging Technology for Business Solutions. Tech Mahindra is a testimony to the tireless efforts of our associates and the trust reposed by our investors. I'm confident that we are now geared to grow even faster in the future," said Anand Mahindra, Group Chairman, Mahindra & Mahindra.
Satyam name dropped
One of the biggest outcomes of the final merger announcement is that the brand name Satyam has been dropped from Mahindra Satyam. Instead, Tech Mahindra has been chosen as the brand name. "The brand dons a new look and logo, reflecting the heritage of the Mahindra Group and our positioning represents the new connected world, offering innovative and customer-centric services and solutions," the company stated in a press announcement.
The merged company is amongst the top five Indian IT services companies, with revenues of US$2.7 billion, a team of 84,000 professionals servicing 540 customers across 46 countries. Of the combined revenue, US accounted for 42 percent, Europe accounted for 33 percent and Rest of World (managed out of Singapore) accounted for 25 percent.
Pune-based Tech Mahindra owns close to 43 percent of Satyam. The company has announced that shareholders of Satyam Computer will receive two shares of Tech Mahindra for every 17 shares of Satyam held as on the record date fixed for the merger. A date for recording the exchange is yet to be announced.
Also, Satyam's shares will not be available for trading on the National Stock Exchange and Bombay Stock Exchange after the record date. Tech Mahindra will issue the first set of combined results for the first quarter (April-June 2013; Q1) for FY2014.
Going forward, the Group has outlined a goal, Mission 2015, to increase combined revenues to US$5.0 billion by FY2015 (double that of US$2.4 billion in FY2012). This strategy will see the combined group's China operations increasing staff strength three-fold from 500 a year ago (to 1,500 by 2015), according to a source familiar with the matter.