“The pricing power, size, scale and all these things will definitely be there because the size becomes bigger but we need to see how things shape up over a period of time,” says Sandip Agarwal, AVP, Edelweiss Financial.
L&T Infotech is going to give 73 shares for every 100 MindTree shares. How are you looking at the merger ratio and what does it mean for shareholders?
It is too early to comment exactly on who benefits and who loses, but broadly this enables the joint entity to become much bigger than earlier and in the large deals it will be immensely helpful for both of the companies to participate in the large deals to start with.
L&T Infotech is going to give 73 shares for every 100 MindTree shares. How are you looking at the merger ratio and what does it mean for shareholders?
It is too early to comment exactly on who benefits and who loses, but broadly this enables the joint entity to become much bigger than earlier and in the large deals it will be immensely helpful for both of the companies to participate in the large deals to start with.
There will be some cost synergies as well and the biggest benefit is that in the short term, the merger will create a bigger brand to recruit or retain talent although in the short term, when such mergers happen, then some employees may want to leave the organisation.
So how these things shape up will define the future but broadly as of now, the cost synergies and the bigger brand to get employees and a bigger size to participate in large deals are the three benefits which we can make out from the merger.
What kind of synergies do you see this creating in terms of scale, size, pricing power etc?
The pricing power, size, scale and all these things will definitely be there because the size becomes bigger but we need to see how things shape up over a period of time. It is very early to comment anything specific on that. Whatever we calculate on paper in terms of synergy and how much of that is achievable will depend on how it is integrated and how it is executed.
I would prefer to reserve the comments for the time and see how everything works out before we can comment anything on it.
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