- On August 31, Happiest Minds signed a definitive agreement to combine with ITC Infotech, creating a scaled, AI-first global technology services enterprise with an annual revenue of ₹9,000 crore by FY 2028.
- Officials revealed that upon listing, the Happiest Minds-ITC Infotech combination is expected to be valued at ₹18,000 crore, with ITC Infotech's market value calculated at ₹9,000 crore and Happiest Minds pegged at ₹9,167 crore.
- As part of the transaction, ITC Infotech will acquire an aggregate minority stake of 22.1% in Happiest Minds for a total consideration of ₹930 crore (average price of ₹95/share).
- The combined entity will have over 19,000 employees (of which 12,500 are from ITC Infotech) and serve over 800 customers in over 30 countries.
- On the swap ratio, shareholders would receive 25 shares of ITC Infotech for every 81 shares of Happiest Minds they hold.
- Post merger, ITC Limited would hold a 74% stake, while Happiest Minds shareholders (including Mr. Soota) will collectively hold 26% of the new merged entity, complying with SEBI's Minimum Public Shareholding (MPS) rule.
- Happiest Minds achieved a premium valuation of 15.1x EV/EBITDA compared to ITC Infotech's 13.6x EV/EBITDA, due to its cutting-edge business model, according to officials at a media conference on September 2.
- Ashok Soota's 22.1% exit will be executed in a two-stage, milestone-based structure: 11% and 11.1%, instead of a lump-sum block deal, as block deals could impact the company’s valuation.
ITC Infotech and Happiest Minds Technologies are merging to form a new AI-first technology services firm valued at ₹18,000 crore. This strategic move allows ITC to enhance its market presence while acquiring a 22.1% stake in Happiest Minds for ₹1,330 crore.123
The merger will result in ITC holding a 74% stake in the combined entity, with Happiest Minds shareholders retaining 26%. This structure complies with SEBI’s Minimum Public Shareholding (MPS) rule, ensuring at least 25% public float.
The combined company is projected to achieve an annual revenue of ₹8,000 crore by FY 2028, serving over 800 customers across 30 countries with a workforce exceeding 19,000 employees. The merger is seen as a strategic response to the challenges faced by both companies, with Happiest Minds experiencing a decline in operating margins from 25% to 17% since FY21.4
The valuation of the merged entity reflects a premium for Happiest Minds, which has an EV/EBITDA ratio of 15.1x, compared to ITC Infotech’s 13.6x. This merger is expected to provide a robust platform for growth in the rapidly evolving tech landscape.
“The merger will create a combined workforce of over 19,000 employees serving 800+ customers across 30 countries. Shareholders will receive 25 ITC Infotech shares for every 81 Happiest Minds shares, with Ashok Soota's 22.1% exit structured in two tranches to avoid valuation impact.”
