Noida-based Birlasoft, a part of the $1.6-billion CK Birla Group, is merging with bigger IT services company KPIT Technologies to create a $700-million combine. After the merger, KPIT will be split into two separately listed businesses — one focused on automotive engineering and mobility solutions, and another on enterprise digital IT services.
The promoters of Birlasoft and KPIT will buy each other out with the former keeping the over $500-million enterprise digital IT services company. The promoters of KPIT will buy out Birlasoft from the $200-million automotive engineering company, forming the new KPIT.
The complex merger and demerger deal, involving three stages, is seen as a winning formula for both Birlasoft and KPIT. Birlasoft will control a larger enterprise digital services platform, while KPIT gets to focus on a fast growing mobility solutions business.
The transaction will see KPIT promoters and Birlasoft launching an open offer for the minority shareholders of KPIT Technologies. The transaction is structured as a share-swap arrangement with some cash component, though the details weren’t immediately disclosed.
The new KPIT Technologies will be led by Kishor Patil as the CEO and MD. The new ‘Birlasoft’, which will emerge over the next year, will combine the management team and the IT services business of KPIT with the current Birlasoft. It will be led by Anjan Lahiri as the CEO and MD.