LTI and Mindtree’s $3.5bn merger creates Indian tech giant

BY Fraser Tennant

In a combination that creates an Indian tech giant, global multinational information technology services and consulting companies L&T Infotech (LTI) and Mindtree are to merge in a transaction valued at $3.5bn.

The two companies have decided that, in light of recent industry shifts, such as the prominence of large deals and the preference for end-to-end offerings, the time is appropriate to combine the strengths of both organisations to better serve customers.

Under the terms of the merger agreement, all shareholders of Mindtree will be issued shares of LTI at the ratio of 73 shares of LTI for every 100 shares of Mindtree. The new shares of LTI so issued will be traded on the National Stock Exchange of India and the Bombay Stock Exchange.

Significant scale benefits are anticipated through LTI and Mindtree’s complementary strengths, resulting in a stronger portfolio of offerings across verticals. Enhanced customer engagement and delivery model through industrialisation of delivery and streamlined value-enabling processes is expected to result in improvement in large deal capabilities.

These opportunities will create a more distinctive employee value proposition and stronger partnerships with ecosystem players.

The name of the combined entity will be ‘LTIMindtree’ and will leverage the advantages of both the brands and create value for stakeholders.

“This merger represents our continued commitment to grow the IT services business in line with our strategic vision,” said A. M. Naik, chair of Mindtree. “The highly complementary businesses of Mindtree and LTI will make this integration a ‘win-win’ proposition for our customers, investors, shareholders and employees.”

The transaction is subject to shareholder and regulatory approvals.

“We are confident that the proposed merger will help us build on the combined strengths of both these organisations to unlock synergies through scale, cross-vertical expertise and talent pool,” said S. N. Subrahmanyan, vice chair of LTI. “This will help us emerge as a partner of choice for large-scale tech transformations and create a distinctive employee value proposition.”

Until the merger process is complete, for the moment, both companies will continue to function independently while a steering committee oversees the transition.

News: India's L&T Infotech, Mindtree merge to create $18 billion tech company

China’s CH-AUTO goes public in $1.7bn SPAC deal

BY Fraser Tennant

In a move that takes the Chinese electric vehicle manufacturing and design service company public, CH-AUTO Technology Corporation Ltd is to merge with US special purpose acquisition company (SPAC) Mountain Crest Acquisition Corp. IV in a deal valued at $1.7bn, including debt.

Under the terms of the definitive agreement, CH-AUTO shareholders will be entitled to receive approximately 125 million shares valued at $10 per share, subject to closing adjustments.

The combined company plans to operate under the name CH Auto Inc and list on the Nasdaq stock exchange.

“The past two years have been quite challenging for us,” said Qun Lu, founder and chief executive of CH-AUTO. “We had to reduce our operations by slowing down the businesses of manufacturing of vehicles and automotive parts. By entering into this agreement with Mountain Crest, we expect to see a positive and rebounding impact on CH-AUTO’s finance capabilities, manufacturing and sales activities, and promotion of brand awareness.”

Mr Lu will continue to lead the holding company as its chief executive after closing of the transaction, which is expected in the fourth quarter of 2022.

“CH-AUTO is a unique and compelling investment opportunity, being one of the first electric vehicle automakers in China with proven technology breakthroughs as well as manufacturing innovations, along with its enormous future growth potential through its existing and pipeline vehicle models,” said Suying Liu, chairman, chief executive and chief financial officer of Mountain Crest. “I am thrilled to be partnering with Mr Lu and his exceptional team to bring their vision to fruition.”

While the transaction has been approved by the boards of directors of CH-AUTO and Mountain Crest, it will require the approval of stockholders and is subject to other customary closing conditions, including the receipt of certain regulatory approvals.

Mr Lu concluded: “Dr Liu and I are excited about the development prospect for the combined company, and we expect that CH-AUTO will rapidly transform into a leading next-generation automotive company that is built on years of design and manufacturing experience.”

News: Chinese EV company CH-AUTO to go public via $17-bln SPAC deal

Sembcorp agrees $6.29bn Keppel Corp deal

BY Richard Summerfield

Singaporean offshore engineering group Sembcorp Marine has agreed to a $6.29bn merger with Keppel Corp’s offshore and marine unit. 

Under the terms of the deal, Temasek, Sembcorp’s majority shareholder, will become the largest shareholder in the merged company, with a 33.5 percent stake. As part of the merger, Keppel and its shareholders will own 56 percent of the newly combined company, with Sembmarine’s shareholders owning the rest.

According to a joint statement announcing the deal, the combined entity’s market value was S$8.7bn on a proforma basis, but that this could change based on the entity’s share price when it lists.

The combined company will be wholly owned by a new holding entity, which will be listed on the Singapore stock exchange, the two companies said in the joint statement. A shareholder meeting is expected to be held in the fourth quarter to seek approval for the transaction, which is subject to various regulatory sign offs.

“The signing of a win-win agreement on the Proposed Combination of Keppel O&M and Sembcorp Marine marks a strategic milestone for the offshore & marine sector,” said Loh Chin Hua, chief executive of Keppel and chairman of Keppel O&M. “It brings together two leading O&M companies in Singapore to create a stronger player that can realise synergies and compete more effectively amidst the energy transition. Together with the resolution of Keppel O&M’s legacy rigs, this is a major step forward in Keppel’s Vision 2030 journey, as we simplify our business and sharpen our focus on providing solutions for sustainable urbanisation.”

“The Proposed Combination marks a major milestone in Sembcorp Marine’s strategic business transformation journey since 2015 to stay resilient amid dramatic changes in our industry,” said Tan Sri Mohd Hassan Marican, chairman of Sembcorp Marine. “Sembcorp Marine and Keppel O&M are Singapore’s homegrown marine icons. I am confident the Combined Entity, with its larger operational scale, broader geographical footprint and enhanced capabilities, will create a leading Singapore player to capitalise on the opportunities in the offshore and marine, as well as the renewable and clean energy sectors.”

“We are pleased that Keppel and Sembcorp Marine have come to an agreement on the terms of a combination that we think will be transformational for the companies,” said Nagi Hamiyeh, head of the portfolio development group at Temasek. “We believe the combined business will have the expertise and capacity to accelerate the pivot towards growing opportunities in the renewable and clean energy sectors, and pursue meaningful projects around the world that address the increasing need for greener and cleaner energy solutions. In doing so, it will be able to deliver long-term value creation for shareholders and other stakeholders. We look forward to the support of the shareholders of Keppel and Sembcorp Marine to make this possible.”     

News: Temasek-backed oil rig builders agree $6.3 bln merger amid sector downturn

Elon Musk acquires Twitter in $44bn transaction

BY Fraser Tennant

In a deal that shifts control of the social media platform to the world's richest man, Twitter, Inc. has been acquired by entrepreneur, investor, media proprietor and business magnate Elon Musk for $44bn.

Under the terms of the definitive agreement, Twitter stockholders will receive $54.20 in cash for each share of Twitter common stock that they own upon closing of the proposed transaction. Upon completion of the transaction, Twitter will become a privately held company.

Mr Musk has secured $25.5bn of fully committed debt and margin loan financing and is providing an approximately $21bn equity commitment. There are no financing conditions to the closing of the transaction.

The world's richest person according to Forbes magazine, Mr Musk has an estimated net worth of $273.6bn, mostly due to his shareholding in electric vehicle maker Tesla and his aerospace firm SpaceX.

"Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated," said Mr Musk. "I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans.”

The transaction, which has been unanimously approved by the Twitter board of directors, is expected to close in 2022, subject to the approval of Twitter stockholders, the receipt of applicable regulatory approvals and the satisfaction of other customary closing conditions.

"The Twitter board conducted a thoughtful and comprehensive process to assess Elon's proposal with a deliberate focus on value, certainty, and financing,” said Bret Taylor, independent board chair at Twitter. “The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter's stockholders."

Mr Musk concluded: “Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it."

News: Musk gets Twitter for $44 billion, to cheers and fears of 'free speech' plan

Fight for Twitter intensifies amid ‘poison pill’ tactics

BY Richard Summerfield

The fight for control of social media giant Twitter has intensified in recent days as the company responds to the $43.3bn takeover offer from entrepreneur Elon Musk.

In early April, Mr Musk, the chairman of Tesla, announced that he had become Twitter’s largest stakeholder after quietly acquiring a 9.2 percent stake in the company in recent months. He was then offered a seat on the board, a move that was abruptly reversed after Mr Musk declined. He then made the offer to acquire the company outright.

Mr Musk informed Twitter last week that his $54.20-per-share all-cash bid for the company was his “best and final offer”, and that he would reconsider his position as a Twitter shareholder if it was rejected. He has claimed his offer would help “unlock” the company’s “extraordinary potential”. He also noted that he had made the offer because he believes it is important to have an “inclusive arena for free speech.” Furthermore, he said that if Twitter’s board of directors chose to reject the offer, it would be “utterly indefensible not to put this offer to a shareholder vote”.

In response to the offer, Twitter’s board unanimously approved a plan that would allow existing shareholders to buy stocks at a substantial discount in order to dilute the holdings of new investors. The ‘poison pill’ tactic is the clearest evidence so far that Twitter intends to fight the takeover. It would go into effect if a shareholder were to acquire more than 15 percent of the company in a deal not approved by the board and expires 14 April 2023. Every other shareholder aside from Mr Musk would be allowed to purchase new shares at half the market price, which stood at $45.08 at the end of trading on Thursday last week.

“The Rights Plan does not prevent the Board from engaging with parties or accepting an acquisition proposal if the Board believes that it is in the best interests of Twitter and its shareholders,” Twitter said in a statement.

In addition to Mr Musk’s takeover offer, Thoma Bravo, a technology-focused private equity firm that had more than $103bn in assets under management as of the end of December, is also believed to be exploring the possibility of putting together a bid for the company.                

Asset manager Vanguard Group said in a filing submitted recently to the Securities and Exchange Commission (SEC) that, as of 8 April, its funds now own a 10.3 percent stake in Twitter, making it the company’s largest shareholder.

Mr Musk is facing legal action over his Twitter share purchases, with one investor launching a potential class action lawsuit against him for failing to disclose his buy-up of shares before the required deadline to do so. Mr Musk is also facing several investigations by the SEC for his investment activities, including insider trading allegations related to his own tweets.

News: Twitter adopts 'poison pill' as challenger to Musk emerges