ITC Infotech Agrees To Buy 22.1% Stake In Happiest Minds For ₹1,330 Crore

ITC Infotech, the wholly-owned subsidiary of ITC Ltd., is set to become a major shareholder in Happiest Minds Technologies after agreeing to buy a 22.1% stake in the Bengaluru-based IT services company from its promoter group. Founder Ashok Soota and Ashok Soota Medical Research LLP are among the sellers.

The proposed transaction covers 3.37 crore Happiest Minds shares and will cost ITC Infotech around ₹1,330 crore. The stake purchase is the first step in a larger deal under which Happiest Minds will eventually be merged with ITC Infotech, subject to regulatory and shareholder clearances.

ITC Infotech To Acquire Stake In Two Tranches

The first part of the transaction involves 1.68 crore Happiest Minds shares, or an 11% stake, at ₹390 apiece. This works out to ₹653.25 crore.

ITC Infotech will acquire another 1.69 crore shares, representing 11.106% of Happiest Minds, at ₹400 per share. The second tranche is valued at ₹676.47 crore.

The transaction and the subsequent merger will require a series of approvals, including approvals from the Competition Commission of India, stock exchanges and the National Company Law Tribunal, as well as shareholder approval. The board of ITC Ltd. has already given its approval to the proposal.

Happiest Minds Merger With ITC Infotech

After the stake acquisition, Happiest Minds will be amalgamated with ITC Infotech. The two companies will continue to function separately until the required approvals are received and the merger process is completed.

Under the proposed share-swap arrangement, shareholders of Happiest Minds other than ITC Infotech will receive 25 fully paid-up ITC Infotech shares of ₹10 each for every 81 Happiest Minds shares of ₹2 each held by them on the record date.

The merged business is proposed to be listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The companies expect the transaction to take around 15 months to complete.

The arrangement also gives ITC Infotech a path to a stock market listing through its merger with Happiest Minds.

Once the merger goes through, ITC Ltd. is expected to own about 73.4% of the combined company. Happiest Minds shareholders will hold the remaining 26.6%. The latter will include around 7.6% held by Happiest Minds' existing promoters, who will be reclassified as public shareholders, and roughly 19% held by other public investors.

What ITC And Happiest Minds Said

ITC Chairman and ITC Infotech Chairman Sanjiv Puri said the combination would bring together the two companies' technology capabilities and domain expertise, while giving them greater reach across markets.

Ashok Soota, Chairman and Chief Mentor of Happiest Minds, said the merger would bring the company into a larger organisation and highlighted the complementary nature of the two companies' businesses.

ITC Infotech MD and CEO Manas Chakraborty said the deal would combine Happiest Minds' capabilities in digital engineering, data, AI and cybersecurity with ITC Infotech's expertise in domains, cloud and engineering services.

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