Happiest Minds crashes 8% after ITC Infotech deal; ITC rises 3.3% intraday

Shares of Happiest Minds Technologies Ltd fell sharply on Tuesday after ITC Infotech announced plans to acquire a 22.1% stake in the company from promoter Ashok Soota and Ashok Soota Medical Research LLP for around ₹1,330 crore, followed by a proposed merger of the two companies.

Happiest Minds shares were trading at ₹373.55, down ₹33.40, or 8.21%, on the NSE. The stock touched an intraday low of ₹372.10. The stock has a 52-week range of ₹330.20-₹583.40, while its market capitalisation stood at around ₹5,620 crore. 

In contrast, ITC Ltd shares were trading at ₹262.65, up ₹7.15, or 2.80%. The stock gained as much as 3.3% during the session.

ITC Infotech to acquire 22.1% Happiest Minds stake

ITC Infotech, a wholly owned subsidiary of ITC Ltd, will acquire 3.36 crore equity shares, representing a 22.1% stake in Happiest Minds, from Soota and Ashok Soota Medical Research LLP in two tranches.

The acquisition is valued at around ₹1,330 crore. The transaction will be followed by a Scheme of Amalgamation under which Happiest Minds will be merged with ITC Infotech.

Once the merger is completed, ITC Infotech is proposed to be listed on both the BSE and NSE. ITC Ltd will hold around 73.4% in the merged entity, while existing Happiest Minds shareholders will hold the remaining 26.6%.

The transaction is subject to statutory, shareholder and regulatory approvals, including those from the Competition Commission of India, stock exchanges and the National Company Law Tribunal. The companies expect the process to take around 15 months and will continue operating independently until the necessary approvals are received.

Combined entity targets $1 billion revenue by FY28

The proposed combination is expected to create an AI-first technology services company with more than 19,000 employees and a target of $1 billion in annual revenue by FY28.

The merger will bring together ITC Infotech’s capabilities in cloud, data analytics, Product Lifecycle Management (PLM), SAP, enterprise transformation and managed services with Happiest Minds’ strengths in digital product engineering, data, cybersecurity and specialised artificial intelligence.

The companies expect the combination to strengthen their ability to compete for large transformation-led technology contracts, while also creating opportunities for cross-selling and upselling across their respective customer bases.

The combined business is also expected to strengthen ITC Infotech’s presence in the US and the Banking, Financial Services and Insurance (BFSI) segment, while adding capabilities across sectors such as healthcare, hi-tech and edtech.

Ashok Soota, Chairman and Chief Mentor of Happiest Minds, said the merger would make the company part of a larger organisation.

“I am delighted that after the completion of legal formalities, Happiest Minds will become an important part of a larger organization through its amalgamation with ITC Infotech,” Soota said.

He said the two companies had significant complementarity in their business portfolios and added, “We believe that ITC Infotech is the best partner for Happiest Minds to fulfil its destiny and we are pleased that our team will have a welcoming new home.”

Sanjiv Puri, Chairman of ITC Ltd and ITC Infotech, said the combination of the two companies’ capabilities would strengthen their ability to deliver technology solutions globally.

“The coming together of our complementary strengths, deep domain expertise and future-ready capabilities will further enhance our ability to deliver cutting-edge solutions across geographies,” Puri said.

He added that he was encouraged by the shared values, people and customer-centricity of the two organisations.

Manas Chakraborty, MD & CEO of ITC Infotech, said the combination was aimed at increasing the value delivered to customers. He said bringing together Happiest Minds’ digital engineering, data, AI and cybersecurity capabilities with ITC Infotech’s domain, cloud and engineering expertise would create a “full stack AI-led transformation partner.”