With the Indian Information Technology Service Sector (IT) witnessed a strong growth momentum on the back of the digital transformation, Larsen & Toubro (L & T) Multinational conglomerate (L & T) is ready to combine IT – L & T Infotech (LTI) and Mindtree.

The Bloomberg report states that the mergger announcement can be announced at the beginning of next week, with the details of the swap-sharing ratio. However, the IT service company closes Mindtree in its income call saying that the news is a pure listener and it will not respond to speculation.

Emails sent to L & T Read: “We do not comment on speculative news.” Emails sent to LTI did not receive a response.

“The merger is always on the card. The time is right. The two companies have done very well and the group wants to open this value, by combining these two companies into larger entities,” said a source in knowledge.

“This merger also matches the group vision for MORF into the conglomerate that focuses on service. More importantly, the entity joins do not have overlap,” another source said.

The entity is combined, which will have a market capitalization of more than $ 22.05 billion (Rs 1.68 trillion), will have a combined income of $ 3.5 billion. This will make it the sixth largest IT service player from India.

For L & T, this merger is related to group vision to become more service oriented. Mergers have business synergies because both companies have a complementary portfolio. For example, communication media and technology, retail, consumer package goods, and manufacturing are a larger focus area for Mindtree.

In the case of LTI, it is a banking and financial services, and insurance which is the largest vertical, with more than 32 percent and more than 13 percent of revenue, in the third quarter of 2021-22.

However, the buzz of the merger has not dropped well with the market because the stock price of the two companies fell. Mindtree Stock fell 3.33 percent to Rs 3,960.8 per share; Stock LTI at Rs 5,866 per share fell 2.66 percent at the end of the trade day.

Analyst believes that the merger is not time. “The merger of these two entities is the previous conclusion. Given the growth momentum witnessed by these companies, the merger at this time might not make sense because it will defocus the management of capturing growth to manage the complexity of the merger,” said Pareeksh Jain, Founder and Chief Executive Offictors – Company Engineering Consultation Services.