Larsen & Toubro Ltd. is in talks to merge its thermal power business with the Indian unit of Singapore-based Sembcorp Industries Ltd., according to people with knowledge of the matter. The share-swap deal will help India’s largest engineering conglomerate pare debt, the people said, asking not to be identified as the deliberations are private. The transaction could value the combined business at around $4.5 billion including debt, and would exclude Sembcorp’s renewable energy business, one of the people said. L&T is considering moving as much as 100 billion rupees ($1.3 billion) of debt to the merged entity, according to the person. It may eventually seek a separate listing for the power business after the deal, the person said. Deliberations are ongoing, and details of the potential transaction could change or talks could fall apart, the people said. A representative for L&T didn’t immediately respond to requests for comment, while a representative for Sembcorp couldn’t immediately comment. Shares in Sembcorp Industries extended gains to as much as 2.7% following the Bloomberg News report, while L&T pared losses and was down 0.5% as of 13:38 p.m. local time.
