Mindtree-L&T Infotech merger operationalised: Record date, fractional entitlements, other details
- The parent company, L&T, will hold 68.73% of the merged entity of Mindtree and L&T Infotech
The L&T Group has announced operationalisation of the merger of Mindtree with LTI (Larsen & Toubro Infotech), effective November 14. The new entity, LTI Mindtree, will begin trading from November 24. Mindtree shareholders will get 73 LTI shares for every 100 shares they hold post merger. LTI and Mindtree merger was announced in May 2022. The parent company, L&T, will hold 68.73% of the merged entity - LTIMindtree.
Here are 10 things to know about Mindtree-LTI merger:
The board of directors of LTI and Mindtree have fixed November 24, 2022 as the record date for the purpose of determining the shareholders of Mindtree Limited to whom equity shares of the amalgamated company would be allotted.
Mindtree chief Debashis Chatterjee has been designated the Chief Executive Officer and Managing Director of the combined entity for a term of three years.
Mindtree shares were trading slightly lower at ₹3,754 today while L&T Infotech shares were up 0.8% at ₹5,205.
The merged entity will have over 90,000 employees with operations across 30 countries.
In case of fractional shares, they will be consolidated and allotted to a trustee authorized by the board of the LTIMindtree which shall sell the shares and pay the money to investors in proportion to their respective fractional entitlements.
In case of money received from fractional entitlements, there is no TDS obligation in the case of resident shareholders. “A fractional share refers to a unit of stock that is less than one full share. Fractional shares arise due to stock splits, bonus shares and similar corporate actions. Fractional shares are not traded in the markets,” according to Zerodha.
Citing an example, Zerodha said: "Suppose you hold 29 shares of ABC Ltd, which has merged recently, and the new company (XYZ Ltd) comes out with an offer to provide the stock of XYZ in a proportion of one stock for every five stocks held (1:5). In this case, you can get only 5 shares(5*5 = 25) of the new company XYZ, while the remaining 4 shares of the old company ABC remains(29-25). In this case, you will be eligible for a fractional share of 0.8 (4 shares / 5 = 0.8) of XYZ.”
However, for non-resident shareholders, TDS@15.60% will be applied.
In case of Non-Resident shareholders having no PAN/invalid PAN and Non-Resident shareholders having valid PAN but have not filed Income Tax Return for the previous year, the TDS rate will be 31.20%.
AM Naik, Group Chairman of L&T and Chairman of LTIMindtree, said, “LTIMindtree is integral to L&T’s technology-led growth vision and is poised to play a crucial role in the expansion and diversification of our services portfolio. The highly complementary strengths of LTI and Mindtree make this integration a win-win proposition for all our stakeholders — clients, partners, investors, shareholders, employees, and communities — furthering L&T’s tradition of innovation, excellence, trust, and empathy.”
Debashis Chatterjee, Chief Executive Officer and Managing Director of LTIMindtree, said, “Amid the proliferation of new business models and revenue streams in a rapidly converging world, LTIMindtree will help businesses proactively take on and shape the future by harnessing the full power of digital technologies. Armed with top talent, comprehensive offerings, and a cumulative experience of more than five decades, LTIMindtree brings the diversity of scale and capabilities required to help businesses reimagine possibilities, deliver impact, and get to the future, faster.”
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